FADA urges GST Council for tax reduction on two-wheelers to increase demand: Details

The Federation of Automobile Dealers Associations (FADA), has submitted an application to the GST Council of India urging an immediate reduction in the GST rate on two-wheelers from the current 28% to 18%. FADA says that this intervention is aimed at making two-wheelers more affordable, reviving demand and reinvigorating the 2W industry which, as per the association, has seen significant ‘slump' in sales over the past few years.

FADA President Mr. Manish Raj Singhania affirmed, "The two-wheeler industry is at a critical juncture, grappling with unprecedented challenges such as rising inflation, stringent emission norms and the post Covid-19 effects in Bharat of India. Now is the opportune moment for the GST Council to reduce the GST rate on two-wheelers, making them more accessible for the common man, thereby providing the much-needed boost to the industry, generating employment opportunities and fostering India's overall economic growth."

The prices of various two-wheelers have risen significantly over the past few years, impacting their affordability. Taking an example of the Honda Activa 125 scooter, the BS4-compliant version of which was launched in 2017 at a base price of Rs 56,954. In 2023, the Activa 125 has a starting price of Rs 78,920 i.e. almost a 40% increment. In another case, the TVS Jupiter scooter was priced at Rs 49,666 in 2017, but now starts from Rs 72,190 (all prices, ex-showroom Delhi). The substantial increase is actually common for all commuter two-wheelers currently available in the market.

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