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Automobile Industry Reactions To GST Changes - Here What Hyundai, Tata, Mahindra & More Have To Say
India's automotive sector is brimming with renewed optimism after the GST Council yesterday (September 3rd)unveiled sweeping changes to the GST slabs for motor vehicles in India.
Small cars, bikes up to 350 cc, and three-wheeler, previously taxed at 28 per cent, will now carry a reduced GST rate of 18 per cent, from September 22, 2025. This sweeping shift is expected to make mass-market mobility substantially more affordable just in time for the festive rush.
At the higher end, larger SUVs, luxury cars, and premium hybrids will now be taxed at a uniform 40 per cent, replacing earlier effective rates that reached nearly 50 per cent when compensation cess was included. Notably, electric vehicles remain firmly in the government's favour, with the existing 5 per cent GST preserved, reinforcing India's plans for a clean and green automotive future.
Here's what the Indian automotive industry had to say about the Indian Government's GST reforms...
Unsoo Kim (pictured above), MD, Hyundai Motor India
"We at Hyundai Motor India Limited (HMIL) welcome the landmark GST reforms announced by the Government of India. The GST overhaul will directly benefit the automotive sector. The announced reforms align seamlessly with the Government's commitment to Viksit Bharat and the Make in India initiative, encouraging domestic manufacturing and boosting demand across both urban and rural markets. Notably, 60% of our ICE portfolio will now fall under the 18% slab rate, with the remainder at 40%."
Shailesh Chandra, MD, Tata Motors PV & TPEM
"These reforms reflect Prime Minister Narendra Modi's vision for next-generation GST that prioritises both ease of living and ease of doing business. The GST Council's decision to retain the 5% GST rate on electric vehicles is a forward-looking move that reinforces India's commitment to sustainable, zero-emission mobility and signals long-term policy stability.
The reduction of GST on small cars to 18% further expands access to personal mobility, making it more affordable for a broader section of society. Together, these measures will not only accelerate EV adoption but also drive innovation, strengthen domestic manufacturing, and propel India toward a cleaner, smarter, and self-reliant mobility future."
Rajesh Jejurikar, ED & CEO - Auto and Farm Sectors, Mahindra & Mahindra
"We applaud the Government for this landmark GST rationalisation, which will have a far-reaching positive impact across the automotive and farming sectors. The move makes tractors and farm machinery more affordable for farmers, reduces costs for commercial vehicles and improves accessibility for personal mobility through rationalisation of rates across all SUVs.
Together, these measures are expected to stimulate demand and drive inclusive growth across the entire ecosystem. We also appreciate the continuation of the 5% GST rate on EVs, which is a critical enabler of India's clean mobility vision. This measure will further accelerate the adoption of electric vehicles and reinforce India's leadership in sustainable, green transportation."
Sudarshan Venu, Chairman, TVS Motor Company
"We applaud the government for taking consistent steps towards boosting growth and enhancing the growing middle class's spending power - all towards realising PM's vision of Viksit Bharat 2047.
The GST tax cuts are a major move by the government to further turbocharge growth. It will significantly boost consumption across segments of society. For our industry especially, it's a welcome move as it will help 2Ws become more accessible and also help those looking to upgrade."
Venkatram Mamillapalle, MD, Renault India
"We welcome the GST Council's decision to rationalise rates into a two-slab structure of 5% and 18%, a landmark reform for the Indian economy. This is indeed an early festive gift from the Government, lifting consumer sentiment, easing household expenses, and strengthening confidence in long-term growth.
For the automobile sector, the move is transformative. The GST reduction on the entry-level car segment (petrol below 1200 cc and diesel below 1500 cc) from 28% to 18%, and a uniform rate for auto components at 18%, make personal mobility significantly more affordable for the masses."
Swapnesh Maru, Dy MD, Toyota Kirloskar Motor
"We thank and congratulate the Government for the landmark second-generation GST reform, a significant step towards accelerating India's journey to a stronger and more resilient economy. The relief extended to smaller vehicles, along with the rationalisation of levies on larger ones, will enhance mobility for the common man by making it more accessible and affordable, while at the same time stimulating growth across the automotive sector.
Given India's rapid economic growth that is bound to increase the demand for energy, particularly fossil fuel consumption by the transportation sector, it is crucial that all cleaner and greener technologies are also promoted and incentivised through suitable policy measures, including taxation, so that these are preferred by consumers over the conventional petrol and diesel vehicles."
The response from India's automakers is clear: the GST reset is a watershed moment for affordable vehicles and EV policy stability. Compact cars and two-wheelers will gain immediate traction with lower rates, while long-term clarity on EVs ensures continued momentum in the Indian clean mobility space.
The industry has welcomed the government's decision to rationalise GST slabs and the lowering of rates for more affordable offerings, along with the retention of the 5% GST rates for EVs. Toyota, though, has called out the government to take the next step - extending a policy similar to what is now there for EVs and smaller vehicles to all cleaner technologies to cut India's reliance on fossil fuels.
The new GST framework isn't just a party favour for Diwali - it's a strategic move by the Indian government to move the country's auto industry in a direction that will see it become accessible for customers, while also accelerating EV adoption as India pushes towards a sustainable and locally manufactured mobility future.
But what does it mean for you and me the next time we head to the showroom. Well for the most part it will be a big drop in prices for most cars and bikes. However, one section of the industry that will be seeing prices go up, will be premium bikes with engines that are above 350cc. However, just how big these changes will be, will depend on how much of these benefits automakers are willing to pass down to us.
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