The Indian automobile industry has widely welcomed the GST Council’s recent decision to rationalise tax rates, describing it as a landmark reform that is expected to enhance affordability, stimulate demand, and advance India’s transition to sustainable mobility.
Top industry leaders and associations have voiced their support, highlighting the wide-ranging impact on consumers and businesses alike.
Anish Shah, Group CEO and MD of Mahindra Group, hailed the decision as a defining moment for India’s tax system. “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,” he said. “By moving to a streamlined two-rate structure and focusing on essentials, the Government has reaffirmed its commitment to Ease of Living and Ease of Doing Business. These reforms will not only provide immediate relief to households but also strengthen key sectors including automobiles, agriculture, healthcare, renewable energy, and MSMEs.”
The Society of Indian Automobile Manufacturers (SIAM) praised the reduction in GST on vehicles to 18% and 40%, down from the earlier 28–31% and 43–50% respectively.
Shailesh Chandra, President of SIAM, noted the decision will significantly benefit first-time buyers and the automotive sector overall. “The automobile industry welcomes the Government’s decision to reduce the GST on vehicles. This timely move will bring renewed cheer to consumers and inject fresh momentum into the Indian automotive sector,” he said. “Making vehicles more affordable, particularly in the entry-level segment, will benefit first-time buyers and middle-income families. We also thank the Government for maintaining the 5% GST on electric vehicles, which supports the ongoing shift towards sustainable mobility.”
C.S. Vigneshwar, President of the Federation of Automobile Dealers Associations (FADA), described the 56th GST Council meeting as a “watershed moment” for the automobile retail sector. “FADA warmly welcomes these bold and progressive reforms that simplify the tax structure, lower rates for mass mobility, and reflect consensus across all states,” he said.
He added that the move will boost affordability and demand while strengthening the overall mobility ecosystem. However, he also called for early clarification regarding the treatment of cess balances currently held by dealers, to ensure a smooth transition.
Automakers have also urged the government to maintain its focus on the electric vehicle (EV) sector to continue driving growth and innovation.
Ajinkya Firodia, Vice Chairman of Kinetic India, welcomed the move but called for continued policy support for EVs. “The GST rate cut will give a strong boost to the economy in an unprecedented manner,” he said. “Our only humble request is that the electric vehicle sector continues to receive special focus. To ensure deeper EV penetration, especially for two-wheelers, we urge the continuation of supportive schemes.”
Rajesh Jejurikar, Executive Director and CEO – Auto and Farm Sector at Mahindra & Mahindra, highlighted the positive impact on the farming community. “We applaud the Government for this landmark GST rationalisation, which will have far-reaching positive effects across the automotive and farming sectors,” he said. “Lowering GST rates on tractors and farm machinery will make them more affordable for farmers, while also reducing costs for commercial vehicles and improving accessibility for personal mobility.”
Luxury carmaker Audi India also welcomed the decision, saying it aligns with India’s broader economic vision and improves ease of doing business.
Balbir Singh Dhillon, Head of Audi India, stated, “We view the GST simplification as a step in the right direction that supports industry growth and helps us expand the market. The Council’s decision to retain a low GST rate for EVs is also welcome, bringing much-needed clarity and making our products more accessible to discerning buyers.”
Experts believe the rationalised tax structure will provide a timely boost to consumption, particularly ahead of the festive season, and accelerate India’s shift towards cleaner, more affordable mobility solutions.
