The GST Council’s landmark decision to streamline the indirect tax regime into two slabs of 5% and 18% has generated optimism across sectors, with the automobile industry among the biggest beneficiaries. The reform is expected to ease household budgets, spur rural consumption, and strengthen India’s growth momentum.
A major highlight is the reduction of GST on entry-level cars from 28% to 18%. The revised rate, applicable to petrol cars under 1200 cc and diesel cars below 1500 cc, is set to make personal mobility more affordable for millions of first-time buyers.
“This is a transformative move that makes personal mobility significantly more affordable for the masses,” said Venkatram Mamillapalle, Managing Director of Renault India. He added that the uniform 18% GST on auto components would simplify costs and benefit both manufacturers and consumers. Beyond cars, lower taxes on tractors, farm inputs, and equipment are expected to reduce costs for farmers and boost semi-urban demand. “The GST reform will boost rural demand, strengthen agri-linked enterprises, and create new growth avenues in Tier 2 and Tier 3 markets,” Mamillapalle said.