Auto Industry Urges Quick GST Rollout as Buyers Delay Car Purchases
Facing a sharp dip in sales and customer inquiries, the Indian automobile industry is calling on the government to fast-track the implementation of proposed Goods and Services Tax (GST) reforms. Industry leaders are pushing for the rollout to take place before the start of the festive season in the second half of September, in hopes of reviving consumer demand.
Following Prime Minister Narendra Modi’s Independence Day announcement regarding next-generation GST reforms and potential tax reductions, many potential buyers are choosing to delay purchases. Expectations of lower GST rates—potentially reducing prices of small cars and two-wheelers by 8–10%—have prompted consumers to hold off in anticipation of better deals.
A top executive at a major automotive company noted, “Sales have declined in double digits since news of the GST cuts began circulating. It’s crucial for the government to act swiftly to avoid further disruptions.”
GST Council Meeting Set for Early September
The GST Council, chaired by Finance Minister Nirmala Sitharaman, is scheduled to meet for a two-day session beginning September 3. The council is expected to finalise and announce the new tax slabs shortly thereafter, possibly within a couple of weeks.
FADA Appeals to Government: “Implement Before Diwali”
The Federation of Automobile Dealers Associations (FADA) has submitted formal requests to the Ministries of Finance, Commerce, and Heavy Industries, urging a swift rollout of the revised GST structure. In its letter, FADA highlighted that consumers are deferring purchases, creating a risk that the traditionally strong festive season may turn into a “whitewash period” for the industry if clarity and implementation are delayed.
FADA emphasized that the lower GST rates—especially for small cars—should be introduced before Diwali, so that pent-up demand can be converted into actual sales during the crucial festive window. The association also requested clear guidelines on how the currently accumulated cess will be managed post-cess removal.
Carmakers Feel the Impact
Venkatram Mamillapalle, Managing Director and CEO of Renault India, acknowledged that the mere speculation around GST cuts has already begun to impact car sales. Customers who anticipate a price drop are choosing to wait.
“Everyone expects that a lower GST will mean more affordable cars. So, those who have the flexibility to wait, are indeed waiting,” Mamillapalle said during the launch of the new Renault Kiger.
Industry stakeholders agree that swift action is necessary. Delays in GST implementation could not only derail upcoming festive sales but also create further volatility in an already sensitive market.
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