India is open to discussions about changing car tax rates, the country’s finance minister said on Wednesday, showing an open mind to negotiations on automakers’ longstanding demand for lower taxes. India’s federal goods and services (GST) tax rate on automobiles, including automobiles, motorcycles, and trucks, is up to 28%, in addition to other taxes levied by the states.
Company executives say this makes vehicles unaffordable for many buyers, especially as high raw material prices and upgrades to meet stricter safety and emissions regulations have already pushed prices up.
“I would be very happy to get in touch with you to see what we can do even with (GST) tax rates, what we can do to ensure that certain (vehicle) segments receive the encouragement that they deserve, “Treasury Secretary Das said Tarun Bajaj at a conference organized by the Society of Indian Automobile Manufacturers (SIAM).
However, Bajaj said he wants automakers to better understand why vehicle sales have been subdued in recent years, and whether this was just due to high taxes or other reasons, and what could be done to revitalize a sector the government considers important deemed to help achieve the growth goals.
Costs have increased over the years and people are finding it increasingly difficult to afford a car, said RC Bhargava, chairman of Maruti Suzuki, India’s largest automaker, during the event as he advocated lower taxes.
Auto sales growth in India has slowed in recent years, initially due to an economic slowdown in 2019, followed by the pandemic since 2020. Recently, issues such as a global shortage of semiconductors have affected sales.