GST Reforms to Benefit Vehicles Across All Segments

The new GST rates and slabs will have a wide-scale positive impact on the many items related to heavy industries, be it auto, transport, or auto ancillaries.

- TBG NETWORK

For instance, the rate cuts for the automobile sector are across different categories. It includes bikes (up to 350cc, which also accommodates bikes of 350cc), Buses, Small cars, Medium and luxury cars, Tractors (<1800cc), among others. The rates are also being reduced on auto parts.

"Lower GST will push demand, helping automobile manufacturers and the large ancillary industry (tyres, batteries, components, glass, steel, plastics, electronics, etc)," the Ministry of Heavy Industries said in a note on Monday. Rising sales of vehicles will increase orders for these components, creating a multiplier effect on MSMEs, which form a large part of this supply chain, the Ministry said. As per estimates, the entire auto industry directly and indirectly supports over 3.5 crore jobs in manufacturing, sales, financing, and maintenance.

"A demand boost will lead to new hiring in dealerships, transport services, logistics, and component MSMEs," the Ministry said. "Informal sector jobs (drivers, mechanics, small service garages) will also benefit."

"Vehicle purchases are also credit-driven (NBFCs, banks, fintech lenders). A revival in auto sales will support retail loan growth, improve asset quality, and expand financial inclusion in semi-urban India," said the ministry. "Policy certainty through rational GST rates encourages fresh investments in the automobile sector."