GST 2.0 boosts demand: Auto industry
A year after the implementation of GST 2.0, top auto industry executives from Tata Motors, Hyundai Motor India, Mahindra Group, and Maruti Suzuki India Ltd said the tax reform has improved vehicle affordability, strengthened consumer confidence and provided a significant boost to demand across segments.
The executives said the reform has helped broaden the customer base, particularly by improving affordability in the entry-level market, while the resulting demand momentum is encouraging automakers to accelerate capital expenditure and expand capacity.
Tata Motors Passenger Vehicles Ltd MD & CEO Shailesh Chandra said GST 2.0 had provided a significant stimulus to the nation’s economy by improving affordability and energising consumer demand.
“The momentum we have built over the past year reinforces our belief that progressive policy, greater accessibility, and desirable products can together expand the market and bring new-age mobility within reach of many more Indians,” he said.
Hyundai Motor India Ltd MD & CEO Tarun Garg said the GST 2.0 reforms have been a significant catalyst for the Indian automotive industry, driving enhanced market accessibility and stronger consumer confidence.
“The passenger vehicle industry has recorded a year-on-year growth of 15 per cent plus during September 2025-March 2026 and 29 per cent plus during April-August FY2026-27 clearly demonstrating the strong impact of these reforms,” Garg said.
It is clearly evident that GST 2.0 reforms have enhanced affordability and accessibility for customers, enabling more Indian families to realise their aspiration of vehicle ownership. We believe these reforms have strengthened the foundations of the Indian automotive sector and will continue to support its long-term, sustainable growth, he added.
“GST 2.0 was an important milestone in India’s journey towards a simpler, more efficient and growth-oriented tax regime.
Mahindra Group CEO & MD Anish Shah said the benefits of GST rationalisation were visible across the group’s businesses, with higher demand also prompting further investments to increase capacity.
“Over the past year, businesses at the Mahindra Group have seen a significant positive impact. Since the GST rationalisation, SUVs have grown 17 per cent, while LCVs (light commercial vehicles) and tractors have grown 20 per cent,” he stated.
Shah said this momentum reflects the role that tax rationalisation can play in improving affordability and supporting demand across both urban and rural India.
“As a result of the enhanced demand, we are making further investments to increase capacity across multiple businesses,” the Mahindra Group CEO & MD stated.
Maruti Suzuki India Ltd MD & CEO Hisashi Takeuchi said the reform had given fresh impetus to India’s growth journey, with the company witnessing particularly strong growth in its entry segment.
“At Maruti Suzuki, passenger vehicle sales grew about 36 per cent year-on-year during Apr-Aug’26. We are particularly encouraged by the entry segment’s growth of over 96 per cent, where improved affordability has brought mobility closer to many more people,” he said in a post on X.
He highlighted that when domestic industry catches scale and competitiveness, more global business automatically shifts to us, leading to more exports. “Encouraged by this growth, we are accelerating our capex plans, which in turn will create a multiplier effect across the economy,” Maruti Suzuki India Ltd MD & CEO said.
The GST Council had approved changes to the tax structure effective September 22, 2025, with petrol, LPG and CNG vehicles of less than 1,200 cc and not more than 4,000 mm length and diesel vehicles of up to 1,500 cc and 4,000 mm length moved to the 18 per cent rate from 28 per cent. The tax rationalisation has been credited with supporting demand across various segments of the automobile industry.
