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Auto dealers want GST on two-wheelers reduced to 18%
AHMEDABAD: Automobile dealers' body, Federation of
Automobile Dealers' Association (FADA),recently made a
representation to the GST Council demanding that GST on
two-wheelers be reduced to 18%. At present, 28% GST is
levied on two-wheelers. This is aimed at making
two-wheelers more affordable, reviving demand and
reinvigorating an industry that has seen a significant
slump in sales over the past few years, according to
FADA.
According to FADA Gujarat,
even as automobile sales bounced back after a slump
during Covid-19, two-wheeler sales failed to recover.
Two-wheeler sales declined 20% from 13.3 lakh in 2018 to
10.7 lakh in 2022.
"The two-wheeler industry has not recovered to its peak
levels since 2018. Even as the industry began
stabilizing, the two-wheeler sector is at a critical
juncture grappling with unprecedented challenges
including inflation, emission norms and a slow uptick in
demand due to weak rural and work from home culture and
reduced discretionary spending," said Pranav Shah, past
chairman, FADA Gujarat.
Shah explained that per dealer sales have gone down by
at least 30% and dealerships are struggling to do
business viably. According to the automobile retailers
body, rising prices of two-wheelers have impacted its
affordability and in turn demand.
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"Popular two-wheelers, including gearless vehicles as
well as motorcycles, have become costlier by up to 80%
from 2016 to 2023. 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% of
the total automobile sales in India. However, due to
continuous price increases since 2020 ,this contribution
has fallen to 72% in FY23, underlining the impact of the
steep price hike," said FADA in a statement.
Lowering the GST rate will enhance the competitiveness
of two-wheelers compared to other transportation modes,
thereby increasing sales and revenue for the industry.
Source::: THE TIMES OF INDIA,
dated 19/05/2023.
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