Increased 18% GST on two-wheelers could be detrimental...: Siddhartha Lal of Royal Enfield expresses concerns over separate taxation on motorcycles
In a recent social media post, Siddhartha Lal, the Executive Chairman of Eicher Motors, has called for a uniform Goods and Services Tax (GST) of 18% on all two-wheelers. Lal's appeal comes amidst rumours of the government considering lowering GST for motorcycles and scooters up to 350cc and potentially increasing GST on larger motorcycles from 28% to as high as 40%.
Lal argues that a uniform GST regime would not only preserve India's leadership in the two-wheeler market but also position India to dominate the emerging electric two-wheeler market. He points out that Indian brands already dominate the small-capacity segment globally and are steadily making inroads into the mid-capacity market.
Rajiv Bajaj, Managing Director of Bajaj Auto, echoes Lal's sentiments. In an "urgent and heartfelt" appeal, he urged against the potential GST increase, stating that it could potentially cripple investment in the two-wheeler sector.
Motorcycles above 350cc make up just about 1% of India's two-wheeler market. However, they offer lower fuel use and maintenance, benefits that also help reduce India's fuel imports. Lal warns that a potential increase in GST on motorcycles above 350cc could "cripple investment and scale" and limit India's ability to expand globally.
Moreover, Lal warns that a split tax structure could undermine India's global leadership in the two-wheeler sector. He suggests that a punitive GST, such as a potential increase on larger bikes, could relegate domestic manufacturers to the lower segment while leaving higher-value markets open to foreign rivals.
Lal further emphasized that by achieving scale in electric vehicles, India can establish itself as the world's hub for next-generation mobility. However, he notes that the potential increase in GST on motorcycles above 350cc may not significantly contribute to government revenue, and raising GST on these motorcycles would add negligible revenue to the government.
For Indian riders, motorcycles above 350cc are not luxury goods; they are efficient, affordable alternatives to cars. Lal's post concludes by stating that India already leads markets such as China, Japan, Europe, and the US in two-wheelers. He urges the government to consider the potential impact of differential taxation on India's two-wheeler industry and its global competitiveness.
