The following are the reactions of key auto industry stakeholders, such as manufacturers, associations, analysts and others, to the government’s move to cut GST on several categories of automobiles and components:
Saurabh Agarwal, Partner & Automotive Tax Leader, EY
“The rationalization of GST rates on automotive vehicles and parts is a truly welcome and significant development. By making vehicles more affordable across all segments, this move will not only boost consumer spending but also simplify complex classification disputes that have long burdened the industry. The discontinuance of the cess is a particularly pragmatic step, which will provide much-needed support to a sector that is a vital contributor to our nation’s GDP.
While this change is broadly positive, the automotive industry must now carefully reassess the financial impact of state incentives and subsidies, which are often linked to GST rates. This may necessitate a renegotiation with state governments to address potential changes in costs and clawback periods.
I am also encouraged by the pragmatic stance on anti-profiteering. A competitive market like ours naturally ensures that the benefits of tax cuts are passed on to consumers. Avoiding excessive administrative burdens will allow these crucial reforms to take root smoothly, without hindering the very progress they are designed to achieve. We are highly optimistic about this new chapter for the automotive sector under the GST framework.”
Dr. Anish Shah Group CEO & MD, Mahindra Group
“The next-generation GST reforms announced today mark a defining moment in India’s journey towards building a simpler, fairer, and more inclusive tax system. By moving to a streamlined two-rate structure and focusing on essentials that touch the lives of every citizen- from food, health, and insurance to agriculture and small businesses -the Government has reaffirmed its commitment to Ease of Living and Ease of Doing Business. The rationalisation measures will not only provide immediate relief to households but also strengthen key sectors such as automobiles, agriculture, healthcare, renewable energy, and MSMEs – all of which are vital to job creation and sustainable growth. The correction of long-pending inverted duty structures in critical industries is welcome.
At Mahindra, we view these reforms as transformative. They simplify compliance, expand affordability, and energise consumption, while enabling industry to invest with greater confidence. This bold step is in line with the vision articulated by the Hon’ble Prime Minister of building a citizen-centric, future-ready Bharat. It strengthens India’s economic foundations and will help drive the next phase of equitable and inclusive growth- journey towards Viksit Bharat @2047.”
Gaurav Vangaal, Associate Director for Light Vehicle Production Forecast at S&P Global Mobility:
“The GST reduction on small cars to 18% is a strategic boost for India’s auto sector, especially as festive demand builds from Navratri through Diwali. Beyond reviving the entry-level passenger vehicle segment, this move unlocks real potential for affordable innovation in the sub-4 meter category. With lower acquisition costs, Indian consumers can now access feature-rich, compact vehicles without a premium price tag. We expect Maruti, Tata, and Mahindra to lead this shift, especially with popular small crossovers like Fronx and Punch poised to gain significant traction,”
Rajesh Jejurikar, ED & CEO -Auto and Farm Sector, M&M
“We applaud the Government for this landmark GST rationalisation, which will have a far-reaching positive impact across the automotive and farming sectors . The move makes tractors and farm machinery more affordable for farmers, reduces costs for commercial vehicles and improves accessibility for personal mobility through rationalisation of rates across all SUVs. Together, these measures are expected to stimulate demand, and drive inclusive growth across the entire ecosystem.
We also appreciate the continuation of the 5% GST rate on EVs, which is a critical enabler of India’s clean mobility vision. This measure will further accelerate the adoption of electric vehicles and reinforce India’s leadership in sustainable, green transportation.”