FADA urges GST rate cut on 2-wheelers from 28% to 18%

PUNE: To make two-wheelers more affordable and revive demand, the Federation of Automobile Dealers Associations or FADA, on Thursday urged the GST Council for an immediate reduction in the GST rate on two-wheelers from the current 28 per cent to 18 per cent.

“The two-wheeler industry is grappling with unprecedented challenges of rising inflation, stringent emission norms and the post Covid-19 effects,” said FADA President Manish Raj Singhania.

He said now is the moment for the GST Council to reduce the GST rate on two-wheelers, making them more accessible for the common man, and providing the much-needed boost to the industry, generating employment opportunities, and fostering India's overall economic growth.

FADA's appeal has been forwarded to the Finance Minister, the Chair of the GST Council, all GST Council members, the Ministry of Heavy Industries, which supervises the automobile sector, and the Ministry of Road Transport & Highways.

This initiative underscores the urgency and significance of the issue.

Over the past few years, the prices of various two-wheelers have risen significantly, impacting their affordability for consumers across India.

This surge in prices can be attributed to multiple factors, including the rising cost of raw materials, stricter emission norms, and higher taxes and levies. For instance, the price of the Honda Activa has escalated from Rs 52,000 in 2016 to Rs 88,000 in 2023.

Similarly, the Bajaj Pulsar has witnessed a substantial increase from Rs 72,000 in 2016 to Rs 1,50,000 in 2023. The Hero Splendor and TVS Jupiter have also experienced considerable price hikes over the same period, with their prices soaring from Rs 46,000 to Rs 74,801 and Rs 49,000 to Rs 88,498, respectively.

The continuous rise in two-wheeler prices has consequently led to a decline in sales, emphasizing the pressing need for intervention and GST rate reduction to restore the industry's growth trajectory.

In 2016, two-wheelers accounted for 78 per cent of the total automobile sales in India.

However, due to continuous price increases since 2020, this contribution has fallen to 72 per cent in FY23, underlining the impact of the steep price hike.