The home-grown automaker, Tata Motors has recently stated that any kind of support from the Government of India towards GST reduction would help the passenger vehicle segment immensely. According to a PTI report, the company feels that any amount of GST cut would negate some of the increase in vehicle prices that came into effect due to the shift to stricter BS6 emission regulations. This will subsequently help car buyers, who are already under pressure due to the current state of the economy, caused by the coronavirus pandemic.

Answering a question on whether lowering of GST would help revive the industry, Shailesh Chandra, President, Passenger Vehicle Business Unit, Tata Motors said, “Due to this transition from BS4 to BS6, there has been a significant escalation in cost. In these trying times, customers are not very confident about the outlook how the future is going to be including their salaries and jobs.” He also added, “On top of that there has been an increase in vehicle prices. It definitely impacts the industry immensely and any support by the government to reduce GST to offset some of the price increase will definitely boost the whole PV industry.”

It was back in October 2018 when the Supreme Court said that from April 1, 2020, all vehicles sold in India must comply with the Bharat Stage VI (BS6) emission regulations, compelling all automakers to invest in the new cleaner technology. This also meant that there would be a direct impact on vehicle prices as well. In fact, auto companies put in around ₹ 40,000 crore to upgrade their facilities and products, while the auto components industry chipped in with an investment of ₹ 30,000 crore for the same.

However, the coronavirus pandemic coinciding with the transition date from BS4 to BS6 regulations worsened the situation, and due to the lockdown, in April 2020, almost manufactures posted zero sales for the first time. This was followed by reduced sales in the subsequent months. Therefore, OEMs and regulatory bodies like the Society of India Automobile Manufacturers (SIAM) have been requesting the government to reduce GST rates on vehicles. So that OEMs can pass on the benefits to customers, thus helping revive the auto industry, which was facing one of the biggest slowdowns since 2019. Currently, automobiles attract GST of 28 per cent with additional cess ranging from 1 per cent to 22 per cent.

Talking about its benefits, Chandra said, “It (reduced GST) will help consumers who are going through low buying sentiments because of uncertain and precarious outlook for the economy and their source of income. So definitely it will be helpful to boost the volumes for the passenger vehicle industry.”