Enhance buoyancy & strengthen confidence: Auto sector reacts to new GST rates

The central government announced major cuts in GST rates across multiple categories, promising a major boost for the auto sector. The new GST structure is rationalised into two tax slabs - 5 per cent and 18 per cent. Under GST 2.0, small cars (petrol below 1200 cc & diesel below 1500 cc) and motorcycles (up to 350 cc) will be taxed at 18 per cent, down from 28 per cent earlier. Auto parts have also been bracketed at 18 per cent, bringing a uniform tax rate structure. Here’s what the Indian auto sector has to say about the GST reform.

R C Bhargava, Chairman - Maruti Suzuki India Limited

“Maruti Suzuki congratulates and thanks the Prime Minister, Finance Minister and the GST council for the decisions taken to restructure the GST system. This is a major reform that will give a boost to the entire economy and take the country closer to its goal of a Viksit Bharat. This reform is another step that would empower the people to shape their future themselves. The last budget put a substantial amount of money into their pockets. Borrowing rates have come down due to inflation control and financial prudence. The new GST system will make many items of daily use more affordable.

The people will have more purchasing power, and that would stimulate more demand and production. The speed of decision-making and implementation is also admirable. The automotive industry would be a direct beneficiary of faster economic development. In particular, Maruti Suzuki is grateful for small cars being placed in the 18% GST basket. The 10% lower tax will stimulate a flagging market, and many more people will be able to buy safer and more comfortable means of mobility. The growth of the car industry in general will also benefit from the GST system, and we expect the industry growth rate to come back to about 7% a year. Manufacturing growth and employment will both benefit."

Unsoo Kim, Managing Director - Hyundai Motor India

“We at Hyundai Motor India Limited (HMIL) welcome the landmark GST reforms announced by the Government of India. This revolutionary step will provide a strong impetus to the Indian economy, enhance buoyancy and further strengthen consumer confidence. By reducing the tax burden on essential goods, the Government has laid the foundation for inclusive growth and a robust, consumption-led economy. The GST overhaul will directly benefit the automotive sector. The announced reforms align seamlessly with the Government’s commitment to Viksit Bharat and the Make in India initiative, encouraging domestic manufacturing and boosting demand across both urban and rural markets. Notably, 60% of our ICE portfolio will now fall under the 18% slab rate, with the remainder at 40%. HMIL remains committed to supporting the Government of India’s vision and contributing meaningfully to the nation’s journey toward becoming a global manufacturing powerhouse."

Santosh Iyer, Managing Director & CEO, Mercedes-Benz India

“The government listened to the automotive industry’s long-standing wish list of rationalising GST rates. This GST revision is a step in the right direction, is progressive and will induce the much-needed impetus by boosting consumption and bringing momentum to the automotive industry, which essentially remains the pulse of the Indian economy. We are thankful to the Government for keeping the GST rate for BEVs unchanged, ensuring faster transition to a decarbonised future."

Shailesh Chandra, Managing Director - Tata Motors Passenger Vehicles & Tata Passenger Electric Mobility

“These reforms reflect Prime Minister Narendra Modi’s vision for next-generation GST that prioritises both ease of living and ease of doing business. The streamlined GST framework goes beyond rate rationalisation with structural reforms enhancing long-term confidence in India’s economic environment. The GST Council’s decision to retain the 5% GST rate on electric vehicles is a forward-looking move that reinforces India’s commitment to sustainable, zero-emission mobility and signals long-term policy stability. The reduction of GST on small cars to 18% further expands access to personal mobility, making it more affordable for a broader section of society. Together, these measures will not only accelerate EV adoption but also drive innovation, strengthen domestic manufacturing, and propel India toward a cleaner, smarter, and self-reliant mobility future."

Rajesh Jejurikar, ED & CEO - Auto and Farm Sector, Mahindra & Mahindra

“We applaud the Government for this landmark GST rationalisation, which will have a far-reaching positive impact across the automotive and farming sectors. The move makes tractors and farm machinery more affordable for farmers, reduces costs for commercial vehicles and improves accessibility for personal mobility through rationalisation of rates across all SUVs. Together, these measures are expected to stimulate demand and drive inclusive growth across the entire ecosystem. We also appreciate the continuation of the 5% GST rate on EVs, which is a critical enabler of India’s clean mobility vision. This measure will further accelerate the adoption of electric vehicles and reinforce India’s leadership in sustainable, green transportation."

Venkatram Mamillapalle, Managing Director, Renault India

“We welcome the GST Council’s decision to rationalise rates into a two-slab structure of 5% and 18%, a landmark reform for the Indian economy. This is indeed an early festive gift from the Government, lifting consumer sentiment, easing household expenses, and strengthening confidence in long-term growth. For the automobile sector, the move is transformative. The GST reduction on the entry-level car segment (petrol below 1200 cc and diesel below 1500 cc) from 28% to 18%, and a uniform rate for auto components at 18%, make personal mobility significantly more affordable for the masses. The rationalised GST will ease household expenses, fuel consumption, and create a multiplier effect on long-term economic growth. With reduced taxes on tractors, agri-inputs and farm equipment, the GST reform will boost rural demand, strengthen agri-linked enterprises, and create new growth avenues in semi-urban and rural India. This will unlock fresh demand in Tier 2, Tier 3, and rural markets where improving farm incomes are driving aspirations for car ownership. Renault is well positioned to leverage this shift, and we believe the reform will accelerate rural and urban demand alike, boost manufacturing, and contribute strongly to India’s economic momentum."

Sudarshan Venu, Chairman - TVS Motor Company

"We applaud the government for taking consistent steps towards boosting growth and enhancing the growing middle class’s spending power - all towards realising PM’s vision of Viksit Bharat 2047. The GST tax cuts are a major move by the government to further turbocharge growth. It will significantly boost consumption across segments of society. For our industry especially, it’s a welcome move as it will help 2Ws become more accessible and also help those looking to upgrade."

Swapnesh R Maru, Deputy Managing Director - Toyota Kirloskar Motor

“We thank and congratulate the Government for the landmark second generation GST reform, a significant step towards accelerating India’s journey to a stronger and more resilient economy. Beyond empowering the common man, this reform is poised to enhance market confidence, strengthen consumer sentiment and stimulate investments — collectively broadening prosperity across the nation. The relief extended to smaller vehicles, along with the rationalization of levies on larger ones, will enhance mobility for the common man by making it more accessible and affordable, while at the same time stimulating growth across the automotive sector. As a next step , it is essential to reduce fossil fuel imports and achieve our stated national objectives of energy self-reliance, promotion of bio-fuels and decarbonisation. Given India’s rapid economic growth that is bound to increase the demand for energy, particularly fossil fuel consumption by transportation sector, it is crucial that all cleaner and greener technologies are also promoted and incentivised through suitable policy measures, including taxation so that these are preferred by consumers over the conventional petrol and diesel vehicles."

Jyoti Malhotra, Managing Director - Volvo Car India

“Volvo Car India welcomes the government’s decision to rationalise GST ahead of the festive season, considering it a timely and commendable step that is expected to provide a much-needed boost to consumer sentiment and support overall economic activity. In the electric vehicle segment, the continuation of the standard 5% GST reinforces the government’s sustained commitment to advancing electrification and promoting sustainable mobility. The removal of the compensation CESS on passenger vehicles is also a progressive measure that will contribute to greater standardisation and stimulate demand across the industry. However, we believe that a uniform tax framework for all internal combustion engine (ICE) vehicles would further encourage innovation, technological advancement, and higher safety standards. The company remains optimistic that this consideration will be addressed in the medium term to broaden access and meet the rising aspirations of Indian consumers. We will now be realigning our strategies in accordance with the revised tax structure to ensure that customers can enjoy the benefits from these measures during the upcoming festive season."

Anurag Mehrotra, Managing Director - JSW MG Motor India

"We at JSW MG Motor India welcome the GST rationalisation announced by the government. It is indeed a landmark reform and comes at a momentous time for mobility, consumers and industry. It is an overdue reform that will significantly bring down the household expenses, addresses the unaffordability of new cars for millions and boost the economic growth in the long run. The reduction to 18% for small petrol and diesel vehicles and 40% on bigger vehicles ensures affordability and inclusivity for today’s diverse customer base. In addition, the government’s decision to maintain a 5% GST on EVs signals a vital push toward sustainable, future-ready transportation. Our diverse portfolio equips us to lead this transformation, delivering unparalleled value, driving adoption, and accelerating India’s evolution to a cleaner, smarter, and more inclusive mobility ecosystem."

Shradha Suri Marwah, President - ACMA

“On behalf of the auto component industry, I extend our deep gratitude to the Hon’ble Prime Minister, Shri Narendra Modi, and the Hon’ble Finance Minister, Smt. Nirmala Sitharaman, for this historic reform. The rationalisation of GST to a uniform 18% across all auto components has been a long-standing recommendation of ACMA. This decisive step will curb the grey market, encourage the use of quality compliant components, ease compliance, and support MSMEs - thereby strengthening the global competitiveness and resilience of India’s USD 80.2 billion auto component industry. We also welcome the GST Council’s approval for faster export refund claims through ICEGATE for smaller exporters, which will help clear pending shipping bills and significantly ease liquidity constraints."

Shenu Agarwal, MD & CEO - Ashok Leyland

“The GST rate reductions announced by the Hon’ble Finance Minister represent a forward-looking step towards simplifying India’s tax structure and accelerating economic momentum. The shift to a streamlined two-tier system of 5% and 18% will not only ease compliance but also bolster key sectors, uplift consumer sentiment, and reduce the financial burden on the common man. Crucially, this move will help mitigate the impact of the recently imposed US tariffs. The specific relief for the commercial vehicle industry is especially welcome. On one hand, it will spur freight traffic, and on the other, it will bring down the cost of buses and trucks, unleashing demand trajectory for commercial vehicles."

Vinod Aggarwal, Vice Chairman EML & Managing Director & CEO - VE Commercial Vehicles

“The GST reform announced yesterday is a very positive and pro-growth move that will immediately lift consumer sentiment and boost demand across a broad range of sectors. It truly a festive gift from the government to the nation and the automotive industry. We wholeheartedly applaud the Finance Minister and the GST Council for reducing GST on commercial vehicles—buses and trucks—from 28% to 18%. This will not only reduce logistics costs for the economy, but encourage customers to upgrade their fleets with modern, fuel efficient and safer trucks and buses.

For buses, this will encourage much-needed fleet modernisation by state transport corporations and private operators, strengthening public mobility. For trucks, it will ease cost pressures for fleet operators and stimulate demand in logistics and freight, which are critical for India’s growth momentum. Together with the reduction in GST on auto components, the GST reforms reinforce the government’s commitment to enabling sustainable growth of the auto sector."

Diego Graffi, Chairman and Managing Director - Piaggio Vehicles

“The reduction of GST on three-wheelers from 28 to 18 percent is a landmark decision for an industry that contributes 5 to 7 percent of India’s automotive market and continues to serve as the backbone of last-mile transportation. The lower tax rate will make vehicles more affordable and ownership more accessible for drivers and small businesses, thereby enhancing connectivity across both urban and rural markets. The reform is also particularly timely for electric three-wheelers, as it will sustain adoption momentum and drive economic activity even in the absence of subsidies. We believe this step will serve as a catalyst for the next phase of expansion and formalisation of the industry."

Udit Sheth - Vice Chairman, Setco Automotive

“The reduction in GST from 28% to 18% on auto components is a welcome step that will provide much-needed relief to both the auto industry and consumers and have a great impact on Total Cost of Ownership. For us at Setco, it will not only ease cost pressures but also stimulate demand, creating a positive ripple effect across the entire supply chain. We see this move as a catalyst for growth in the commercial vehicle sector, and we are optimistic about the momentum it can generate for the broader economy."

Kuldip Singh Rathee, Chairman and Managing Director - ASK Automotive Limited

“We welcome the GST announcement by the Ministry of Finance, which is indeed a pre-festival gift for the entire nation. The next-generation two-slab tax structure marks a landmark reform for the Indian economy and will help ease the lives of the common man. We particularly appreciate the measures taken for the automobile sector, especially for small cars and two-wheelers up to the 350cc segment. This will provide much-needed relief to an industry that has been struggling for the last few years. The reduction of GST on entry-level vehicles from 28% to 18%, along with the retention of 5% GST on electric vehicles, will boost sales among first-time buyers and middle-income families, while also promoting new opportunities for personal mobility and last-mile connectivity. Moreover, the uniform 18% rate on auto components will strengthen the entire ecosystem by reducing ownership costs and improving supply chain efficiency. We are confident that this festive season will set new benchmarks for the Indian automobile sector."

Ravi Mehra, Managing Director - Uno Minda

"We welcome the GST reforms announced yesterday, particularly the reduction of rates on automobiles and auto components from 28% to 18%. This landmark decision will make vehicles more affordable, boost consumer sentiment, and strengthen India's automotive sector globally. The simplified two-rate structure will streamline operations and reduce compliance burdens across the industry. At Uno Minda, this reform provides us with a strong impetus to innovate, invest in new technologies, and deepen our collaborations with OEMs. We believe these changes will accelerate technology adoption, expand manufacturing capacities, and create new opportunities throughout the automotive value chain. We commend the government for this forward-thinking approach that balances fiscal prudence with economic growth and propels India's rise as a global manufacturing hub."

Dr. Raghupati Singhania, Chairman & Managing Director - JK Tyre & Industries

“The GST rate rationalisation marks a pivotal moment in India’s consumption-led growth journey. By reducing levies on essential goods, the government has somewhere eased consumer burden while catalysing fresh demand across sectors. With affordability rising and compliance simplified, it is expected to trigger a demand surge that reinforces India’s position as the world’s fastest-growing major economy.

With regards to tyres reduction of GST from 28% to 18%, and on farm tyres to 5%, is a landmark reform that will give a tremendous boost to the tyre industry and the mobility ecosystem. Tyres are an essential part of everyday life, and this progressive step will benefit both consumers and manufacturers alike. For fleet operators and farmers, lower GST translates into reduced input costs and improved operating efficiency, thereby strengthening demand in these vital segments. Combined with our continued focus on innovation and premiumization, this reform empowers us at JK Tyre to serve customers more effectively and contribute to sustained industry growth."

Anupam Thareja, MD & Co-founder - Classic Legends

“The government’s bold and timely GST reforms will bring a tectonic shift for the greater good, echoing the historic transition from 2-stroke to 4-stroke engines. Classic Legends welcomes the GST rationalisation, especially the reduced rate of 18% for under-350cc motorcycles, which covers our 293cc and 334cc Jawa and Yezdi performance classics. While it raises the tax burden for higher cc motorcycles such as our 652cc BSA Gold Star, we accept it as the hallmark of progressive taxation. The trade-off makes mid-segment bikes accessible to a larger rider community -- a win for India’s motorcycling culture. We thank the Hon’ble Finance Minister for the fresh impetus for demand that will energise the economy amid a slowdown and global tariff wars. Decades ago, our brands faded due to a policy shift; today, policy foresight is helping restore their legendary stature. We will pass on 100% of the GST benefit to our customers. Coinciding with the festive season, we are telling young Indians who aspire to own a true iconic performance motorcycle. Your time is now."

Girish Wagh, Executive Director - Tata Motors

“Guided by the visionary leadership of the Hon’ble Prime Minister and the Hon’ble Finance Minister, the GST Council’s progressive decision to reduce the GST rate on Commercial Vehicles — trucks, buses, and ambulances — to 18% marks a pivotal reform in India’s mobility landscape. This landmark reform will significantly accelerate fleet modernisation, driving the adoption of safer, smarter, and greener vehicles across India. By resolving the long-standing issue of inverted duty for transporters, it unlocks greater affordability and liquidity, strengthening the entire commercial mobility ecosystem. Further, the reduction in GST on hydrogen fuel cells to 5% is a forward-looking move that reinforces India’s commitment to clean energy and zero-emission mobility. This timely intervention is a catalyst for sustainable growth in logistics and public transport, a boost to economic momentum, and a powerful enabler in India’s journey of inclusive growth and nation building."

Akshit Bansal, Founder & CEO - Statiq

"By rationalising rates for vehicles and auto parts, these measures create a more inclusive, investor-friendly environment and accelerate the transition to clean transportation. The focus on making EVs and their components more affordable will benefit manufacturers, innovators, and consumers alike. Importantly, maintaining the 5% concessional GST rate on all electric vehicles clearly demonstrates the government’s commitment to clean mobility and ensures India remains on course for widespread electric vehicle adoption. However, it is now essential to align the GST structure for charging infrastructure with the same 5% slab as EVs themselves. This step would not only catalyse further investments in the charging network but also help build a seamless, robust support system for electric mobility across the country. Statiq applauds the government’s vision for a simplified, citizen-centric GST that empowers the next phase of automotive transformation and looks forward to continued policy support in expediting the development of India’s EV charging ecosystem."

Deepak Jain, Chairman - Lumax Group

"We welcome the Government’s decision on GST reforms and rationalisation. By lowering GST to 18% across all components, will reduce input costs, creating a stronger foundation for innovation, localisation, and long-term competitiveness. Importantly, consumers will benefit from more affordable vehicles and reliable spare parts in the aftermarket, improving both safety and ownership experience. The reforms, well timed, will also bring optimism ahead of the festive season, with demand expected to rise across entry-level passenger vehicles and two-wheelers."

Arnab Banerjee, MD & CEO - CEAT Limited

"We welcome the GST Council’s decision to rationalise tax rates in the tyre sector. The reduction of GST on new pneumatic tyres from 28% to 18%, and the further relief for tractor tyres and tubes to 5%, is a progressive step that will significantly benefit the industry. This reform will make tyres more affordable for customers across commercial, agricultural, and passenger vehicle segments, while also supporting rural mobility through lower input costs for farmers. By addressing a long-standing demand of the industry, the Council has not only provided a boost to the automotive ecosystem but also created room for greater formalisation, compliance, and sustainable growth in the sector."

Rajeev Kapur, President - Helmet Manufacturers Association

“We wholeheartedly welcome the Government’s landmark step to rationalise GST and lower rates on essential and medical products. This progressive reform will ease consumer burden and provide a much-needed boost to critical sectors such as healthcare, farming, and the auto industry. Such measures not only strengthen industry growth but also reinforce India’s commitment to improving ease of living for its citizens. However, it is disappointing that helmets—an undisputed life-saving device—have once again been overlooked in this exercise. India loses nearly 1.8 lakh lives every year in road accidents, with more than 30,000 of these being two-wheeler riders not wearing helmets. In states like Maharashtra, almost 67% of two-wheeler fatalities are directly linked to helmet non-use. By keeping helmets at the 18% GST slab, we are treating them as discretionary consumer goods, when in reality they belong alongside essential safety equipment. Extending GST relief and bringing helmets under the 5% slab will lower costs, encourage adoption of certified helmets, and most importantly, help save thousands of precious lives annually. We therefore urge the Government to urgently revisit this critical issue."

Narinder Mittal, President & Managing Director - CNH India

“We welcome the government’s decision to reduce GST on farm equipment, related components and tyres to 5%. These GST reforms will accelerate mechanisation by making tractors, harvesters, balers and implements more affordable, while lowering overall operating costs for farmers. This empowers industry players to address labour shortages, enhance farmers’ productivity, and promote sustainable practices. For CNH, it provides the right environment to further localise, innovate, and expand our offerings, strengthening India’s role as a global CNH hub for farm machinery. As a leader in the harvesting and post-harvesting segment, we see this reform as particularly timely ahead of the harvesting season, as lower costs will enable more farmers to adopt baling solutions, reducing crop residue burning and its impact on the environment."

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