Lower car GST to revive demand, says Bhargava

Maruti Suzuki is banking on a looming tax cut to power domestic growth especially for its small cars, even as it prepares a stronger export push through a more cohesive partnership with its parent Suzuki Motor Corp.

- Nehal Chaliawala & Ayaan Kartik

A potential GST (goods and services tax) cut from 28% to 18% on small cars may give the original small-car maker in India a big boost by making them more affordable, according to R.C. Bhargava, Maruti Suzuki's chairman.

"Lower GST rates are needed as US tariffs are causing disruptions in other Indian industries," Bhargava said at Maruti Suzuki's annual general meeting on Thursday.

Bhargava has long argued that small car demand was falling as prices had gone beyond the spending capacity of consumers in that segment due to stricter emissions norms and other regulatory requirements, which increased costs.

Maruti Suzuki has also been pushing for more tax and regulatory benefits for hybrid cars in India, a technology its parent has mastered in Japan. Prime Minister Narendra Modi, who earlier this week flagged off the first electric car to be manufactured by Maruti Suzuki, said at the event that hybrid vehicles were a cornerstone of India's clean mobility push.