Two-wheelers may become cheaper by up to Rs 10,000 if GST rate reduced to 18%

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Hailing Union Finance Minister Nirmala Sitharaman’s observation at a Confederation of Indian Industries (CII) event that 28 percent goods and services tax (GST) rate on two-wheelers may be reduced, possibly to 18 percent, Bajaj Auto Managing Director has said this would cut the price of motorbikes and scooters by Rs 8,000-10,000 per unit.

The 41st GST Council meeting on Thursday (August 27) is likely to be a stormy affair as opposition-ruled states have decided to put pressure on the Centre to release the promised compensation for loss of revenue arising from the implementation of GST. Several new reports, however, citing unnamed sources mentioned that Thursday’s meeting has the single-point agenda of compensation to states. The meeting on September 17 is expected to take up the two-wheeler rate revision issue to boost sales ahead of the festive season.

“Lot of pain in the market has been aggravated with high GST rate. Prices of two-wheelers could reduce by Rs 8,000 to Rs 10,000 if the GST rate is cut to 18 per cent,” Bajaj told CNBC-TV18 in an interview.

The outspoken MD of Bajaj also claimed that the automaker has lost Rs 300 crore due to the withdrawal of incentives under the government’s Merchandise Exports from India Scheme (MEIS), mentioning that the Centre should concentrate on focus export incentives on firms that have the scale to become major global players.

Government data demonstrated that automobile and pharmaceutical companies have emerged as main beneficiaries of the scheme, with Bajaj Auto the third biggest beneficiary in 2017-18.

The top five companies that have obtained maximum disbursals during 2017-18 under the scheme include JSW Steel (Rs 301.5 crore), Ford India (Rs 272.8 crore), Bajaj Auto (Rs 246.5 crore), Dr Reddys Lab (Rs 240.6 crore), and Aurobindo Pharma (Rs 211.3 crore).

The cash-strapped Finance Ministry has decided to limit benefits under the flagship MEIS at just Rs 9,000 crore for the April-December period of FY21.

Meanwhile, Venu Srinivasan, Chairman of TVS group, in an exclusive interview to ET NOW, said the two-wheelers are of essential use and the GST should come down to 18 percent from the current 28 percent. In the time of the Covid-19 crisis, people are looking for affordable personal mobility options and this proposed reduction, if implemented, will make these options more accessible to them.

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