This week in Auto: Demand for GST cut exposes rift in industry; Tata Motors needs transformation says Chairman

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26 Aug, 2025 12:21

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The automotive industry is seeking a reduction on the Goods and Services Tax GST on all vehicles, given the sorry state of affairs it has found itself in since several quarters. Its apex lobby body has pushed its public relations (PR) machinery to raise a clamour around it. But a rate cut is not the only issue SIAM is fighting for. More on this later along with the major news that made headlines in the automotive sector this week.

Tata Motors needs transformation: Chairman

The next few years will be decisive for Tata Motors as the company needs to transform itself to be relevant in the world of future mobility by forming partnerships, developing new solutions and optimise investment, according to Chairman N Chandrasekaran.

In his address to shareholders in the company's annual report for 2018-19, he also reiterated that the transition to electric mobility needs to be well planned, with the government and the industry working together to ensure the development of the ecosystem while incentives are provided to stimulate demand and sustainability goals are achieved.

MG Motors launches Hector at Rs 12.18 lakh

British automobile manufacturer MG Motors made its debut in India  on June 27 with the launch of the Hector SUV. The car gets an introductory base price of Rs. 12.18 lakh and will be delivered from the first week of July onwards.

The Hector is MG’s first vehicle in India, but will be followed by its electric model, the eZS. Commenting on the launch, MG Motor India President and Managing Director Rajeev Chaba said the company has already received bookings of over 10,000 units since it opened on June 4.

Hyundai Venue receives 33,000 bookings

Touted as India's first connected car, Hyundai's Venue has received booked over 33,000 times. Over 1,000 units of the sub-compact SUV have also been delivered to Indian customers so far. The Hyundai Venue's main feature is its BlueLink technology, which took two years to develop in partnership with Vodafone.

The BlueLink technology connects the car to your smartphone allowing for a variety of features such as engine start-stop, temperature control, remote location, geo-fencing, live tracking and speed alerts to name a few.

For Mahindra, it is electric, not hybrid

Having invested heavily in electric vehicle technology over the last several years, sports utility vehicle-specialist Mahindra & Mahindra (M&M) said it will not change its business plans in favour of hybrids, something which  some of its bigger rivals are aggressively pushing for.

The Mumbai-based company, which is presently the largest manufacturer of electric vehicles, including electric passenger three-wheelers, cargo vans and personal cars, has prepared a road map to transition to an electric powertrain over the course of the next few years.

To cut or not to cut GST on auto

The market fears that months of weak demand for most of the automotive segments may continue for many more if no corrective measures are taken. The manufacturing community has put the ball in the government’s court stating that it is the right time for it to step in and do the firefighting. The industry is demanding a reduction in GST to 18 percent from 28 percent.

But herein lies the dilemma. Industry veteran R C Bhargava, who is the chairman of Maruti Suzuki believes that the automotive industry does not need any GST rate cut. Bhargava, in an interview to a media house, stated that any cut in GST will impact the revenues of exchequer, which is anyway not a good idea considering the fiscal deficit. This created a rift in the industry’s stakeholders.

But two days later the Society of Indian Automobile Manufacturers (SIAM), which has been strongly lobbying for a rate cut, issued a statement reiterating the demand. The statement, titled ‘Auto Industry is united in seeking lower GST on vehicles’ was in  contention to the views expressed by Bhargava.

“A reduction in GST rates would go a long way in maintaining the price competitiveness of the industry and boosting the consumer demand,” said Rajan Wadhera, president, SIAM.

Not too long ago former SIAM president Pawan Goenka, who is now the managing director of Mahindra & Mahindra, also questioned the need to have a rate cut. But with no demand revival in sight, Goenka too jumped the rate cut bandwagon.

Companies want the government to compensate with a rate cut for all the rise in costs that has happened, as well as those anticipated in the coming months. These include a raw material-led price hike, forex impact, regulatory requirements such as airbags and the upcoming Bharat Stage VI changeover.

Of all the items on which GST is charged, the automobile sector is part of the segment that forms less than three percent of the GST basket. Two-wheelers, which analysts and market experts consider part of daily life, should be taken off from the highest tax bracket to make them more affordable.

But with the government pushing for the electrification on which just 12 percent GST in charged a reduced GST on petrol or diesel-powered vehicles at 18 percent, the pricing gap between the two will be wider than ever before. Consumers will not be willing to pay more for electrified vehicles. This will defeat the idea of promotion of electric vehicles of the government.