Maruti Suzuki Expects New GST 2.0 Regime Will Help the Indian Car Market Grow by 7% Per Year

The recently announced GST 2.0 regime will see a noticeable affordability trend across multiple car segments. Major car makers will see its entry-level cars get taxed more affordably at 18% down from 29% (28% GST+1% cess). This makes Maruti Suzuki confident to say that the Indian automobile scenario is expected to grow by 7%. “The growth of the car industry in general will also benefit from the GST system, and we expect the industry growth rate to come back to about 7% a year,” said R C Bhargava, Chairman, Maruti Suzuki India Limited. 

Bhargava’s expectation is more than double the Society of Automobile Manufacturers Association's (SIAM) estimate of 1-2% for FY 26. “In particular, Maruti Suzuki is grateful for small cars being placed in the 18% GST basket. The 10% lower tax will stimulate a flagging market, and many more people will be able to buy safer and more comfortable means of mobility, added Bhargava. Maruti Suzuki’s major portfolio comprises sub-compact offerings, which include the likes of the Maruti Suzuki Swift, Brezza, Fronx, etc. Variants that are powered by a 1.0-litre engine or the 1.5-litre 4-cylinder engine will now be charged with 18% GST instead of 29% from before. 

Under the GST 2.0  regime, there will be no cess charges onwards. Bigger vehicles that are more than 4m long, like the Grand Vitara, or Ciaz, Ertiga or XL6, used to come with 15% or 17% cess on top of the 28% tax slab they came under. This would bring the total GST charge on them up to 43% to 45%, and in some cases, like the Invicto, up to 50%.  The Government will now charge a flat 40% GST from September 22 onwards on these vehicles, thus bringing a price drop.

“The last budget put a substantial amount of money into their pockets. Borrowing rates have come down due to inflation control and financial prudence. The new GST system will make many items of daily use more affordable. The people will have more purchasing power and that would stimulate more demand and production. The speed of decision making and implementation is also admirable,” noted Bhargava. The Maruti Suzuki Grand Vitara had notably crossed its 3 lakh sales milestone in just 32 months of its launch – thus already suggesting a strong demand for the compact SUV.