Auto sector calls for uniform GST ahead of council meet; Eicher, Hero flag risks of higher tax on premium bikes

The automobile industry is back in focus ahead of the Goods and Services Tax (GST) Council meeting scheduled for September 3–4, with manufacturers renewing their call for a uniform GST rate across the sector. Industry body SIAM has urged the government to rationalise rates, while automakers, including Royal Enfield’s parent company Eicher Motors, have voiced concerns over a possible GST hike on premium motorcycles.Siddhartha Lal, MD of Eicher Motors, warned that raising GST on two-wheelers above 350cc would “damage a segment vital to India’s global edge,” arguing that a split tax regime would hurt investments, restrict global competitiveness, and add little revenue.

Currently, the Centre is considering rate cuts on a range of vehicles and parts. Proposals include reducing GST from 28% to 18% on cars, bikes, tractors, ambulances, and auto parts. The proposed lower rate would apply to petrol cars with engines up to 1,200cc and 4,000mm length, diesel cars up to 1,500cc and 4,000mm, motorcycles up to 350cc, three-wheelers, and ambulances.

On the other hand, the government has also proposed raising GST on racing cars, motorcycles above 350cc, and larger passenger vehicles (engines above 1,200cc for petrol, above 1,500cc for diesel, and length exceeding 4,000mm) from 28% to 40%.Lal emphasised that taxing high-capacity motorcycles more heavily would “cripple investment and scale” and hand an edge to foreign competitors. Hero MotoCorp Chairman Pawan Munjal, meanwhile, said a GST cut would provide “much-needed relief to first-time buyers.”

For context, motorcycles up to 350cc make up 86% of Royal Enfield’s sales and around 95% of Hero MotoCorp’s volumes. Premium models contribute only minimally to sales at TVS Motor and Bajaj Auto as well, though the broader industry has been steadily moving towards premiumisation.

The sector now looks to upcoming tailwinds, including festive season demand, a potential GST rate cut, higher government capital expenditure, and the prospect of rural recovery supported by a healthy monsoon.

Catch updates of the August auto sales data here