28 Percent GST On Two-wheelers Too Much, Says Rajiv Bajaj. Here’s Why We Agree

  • May 7, 2024
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With the current GST rates, even the Hero Splendor Plus price is now almost Rs 1 lakh on-road

Bajaj recently launched the Pulsar NS400Z at a mouth-watering price, and while the launch of the biggest Pulsar bike ever was the highlight of the event, Rajiv Bajaj (CEO, Bajaj Auto) also had some other interesting things to say. 

Bajaj’s bossman was very vocal about the need for a reduction in GST (Goods and Services Tax) rates in India. As of now, the GST rate on ‘luxury items’ is 28 percent and that includes all two-wheelers with an engine capacity less than 350cc (above 350cc, it’s pegged at 31 percent). For this, he (Rajiv Bajaj) said that “...for it to be 28 percent here just makes no sense.” This is considering that the equivalent of GST in major two-wheeler markets in Latin America or even ASEAN countries (Association of Southeast Asian Nations) is between 8-14 percent. He then added “...and especially when recent regulatory requirements including those pertaining to BS6 and ABS norms have, as it is, driven up costs so much and we can see that the motorcycle industry has not come back to its pre-Covid size…”

And we think this makes a lot of sense, as even the price of the best-selling bike in India, the Hero Splendor Plus, now starts from Rs 75,441 (ex-showroom Delhi), meaning its on-road price is close to Rs 1 lakh! Hence, motorcycles have truly become quite expensive and lowering the GST will help reduce their on-road prices by a fair bit. Moreover, small-capacity bikes are usually a necessity rather than a luxury for  most working professionals. Therefore, a reduction in GST will go a long way in making them more accessible to the aam aadmi.

Further expanding on it, he expressed his desire for the government to give relatively clean fuels like CNG a bit of attention too, as it has done to EVs. He said “...as much as the government has taken a positive step with electric vehicles, making the GST on them 5 percent, I would’ve thought that some tempering of GST, if not for petrol vehicles, at least for relatively clean fuels like CNG…”

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Summing up, we agree with all that Rajiv said. GST rates around the 12-14 percent mark (rates that the SIAM or Society of Indian Automobile Manufacturers has suggested to the government) would help manufacturers price the bikes a lot more competitively. And given how price-sensitive our market is, it would only help increase sales numbers multifold. It’d be a small compromise but it’ll be for the greater good in the long term for the people. 

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