The 65th annual conference of the Society of Indian Automobile Manufacturers (SIAM) brought together leaders from the Indian automotive industry. This year’s event was particularly significant due to the recent announcement of a major reduction in GST rates. Passenger vehicles and two-wheelers below 350cc are now under a lower tax slab of 18 percent.
The GST slab changes have led to a decrease in vehicle prices. This is proving to be a significant relief for customers purchasing small cars and compact SUVs. According to Hyundai Motor India’s COO, Tarun Garg, prices in the small SUV segment have been reduced by up to 13 percent. Maruti Suzuki anticipates double-digit growth in the small car segment.
Despite the industry welcoming the GST reduction, the biggest challenge remains the compensation cess. The Federation of Automobile Dealers Associations (FADA) expressed concern to the government, highlighting potential issues in dealers’ e-credit ledgers. This could place a financial burden on dealers and OEMs at the start of the festive season. While the government is publicly assuring a solution, there’s a risk of a loss of ₹2,500-₹4,000 crore during the Navratri sales period.
Concerns have also risen regarding E20 fuel. Social media discussions have raised questions about reduced mileage and potential engine impacts. Union Minister Nitin Gadkari has dismissed these criticisms as propaganda sponsored by the petrol lobby.
The adoption of electric vehicles (EVs) in India is still far from its target. Despite subsidies and incentives exceeding ₹40,000 crore, EVs account for only 7.6% of total vehicle sales, while the target is 30% by 2030.
