Indian auto industry seeks lower GST on eco-friendly two-wheelers
India's automotive sector is requesting the government to reduce the goods and services tax (GST), on environmentally friendly two-wheeler technologies. The Society of Indian Automobile Manufacturers (SIAM) has proposed a tiered GST structure to the Ministry of Heavy Industries. The current uniform GST rate of 28% on all two-wheelers is seen as a barrier to the adoption of cleaner alternatives. The proposed tiered structure aims to make low-carbon technologies more price-competitive.
Why does this story matter?
The Indian government has been pushing for a transition to electric vehicles (EVs) to reduce the country's dependence on oil imports and curb pollution. However, the high cost of EVs and a lack of charging infrastructure have been major roadblocks. In this context, the SIAM's proposal for a tiered GST structure for low-carbon two-wheelers could be a significant step toward achieving the government's EV adoption targets.
SIAM proposes tiered GST structure for two-wheelers
SIAM's proposal suggests an 18-12% GST slab for low-carbon technologies, such as flex-fuel and CNG two-wheelers. The industry body believes that this tiered structure will encourage the adoption of these cleaner alternatives. The proposal also includes an immediate reduction of GST to 18% for flex-fuel and CNG two-wheelers, with a further decrease to 12% once the base GST rate for all two-wheelers is reduced to 18%.
Environmental and economic benefits
The proposed GST reduction hopes to address environmental concerns by promoting cleaner transportation options. CNG, a popular fuel for buses and cars in India, emits significantly less pollution than petrol. Flex-fuel vehicles, which are designed to run on higher ethanol blends, also offer a cleaner mode of transport. The proposal also targets affordability, as high upfront costs currently hinder wider adoption in comparison to other Southeast Asian nations.
