A proposed change in India’s Goods and Services Tax (GST) could significantly shake up the motorcycle market. The new plan aims to simplify the current tax structure, but it would create a stark contrast in pricing for different types of bikes.
What’s Changing?
The new proposal would create two main GST slabs for automobiles:
- 18% GST for bikes with an engine capacity below 350cc. This is a considerable drop from the current 28% and would make these bikes more affordable.
- 40% GST for bikes with an engine capacity of 350cc and above. This new “luxury” rate would be a big jump from the current 31% tax and could make these high-end bikes much more expensive.
How Will This Affect the Market?
The change is expected to have a mixed impact on the two-wheeler market:
- Boost for Smaller Bikes: With 97% of the market falling into the sub-350cc category, a GST cut to 18% would likely drive up sales. This would especially benefit Royal Enfield, as many of its most popular models (like the Classic, Meteor, and Hunter) have engines just under the 350cc mark.
- Price Hike for Luxury Bikes: For bikes with engines of 350cc and above, the new 40% tax could lead to a significant price increase. This might hurt demand and negatively impact the premium motorcycle segment, as brands like Bajaj-Triumph and Harley-Hero would likely pass the higher cost on to consumers.
The GST Council is set to meet on September 3-4 to finalize these proposed changes. If approved, they could reshape consumer choices and the competitive landscape of the Indian motorcycle industry.