Bajaj Auto’s Managing Director, Rajiv Bajaj, stated in an interview that the Government’s decision to cut GST on two-wheelers from 28% to 18% is still very high. The bossman compared the rates with global peers (which include ASEAN and Latin America nations)where taxes range from 8% and 14%.
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Not The First Time
This is not the first time that Rajiv Bajaj has expressed his reservations against the 28% GST rates applied on two-wheelers. His argument primarily stemmed from how it makes affordable two-wheelers expensive, which in turn discourages first-time buyers in rural and semi-urban India. So, this is not the first time he has urged policymakers to apply the tax uniformly across all segments to avoid any sort of distortion.
The “Freedom” Factor
Earlier at the launch of the new Bajaj Freedom 125, Rajiv Bajaj cited how “unsustainable subsidies” on electric vehicles are making the playing field uneven, especially when there is no “no party” happening in the EV segment. Coupled with the fact that EVs attract just 5% GST, is also in turn curbing the growth of other vehicles that run on cleaner fuels and yet attract 28% GST.
The ABS Mandate
However, there is another factor that is working against two-wheelers not becoming affordable anytime soon, simultaneously, with the government mandating that all two-wheelers under 125 cc must come with Anti-Lock Braking System (ABS). The inclusion of this safety feature will not only increase manufacturing costs, but it will also push the base price. So, at the end of it all, will the consumer really stand to gain any actual price drop due to the cut? The effect may be marginal, when you factor in the ABS mandate.
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