Leading manufacturers like Hero MotoCorp and Bajaj Auto have come up with a proposal for a lowering of GST on two-wheelers by 10% in the future. The motorcycle industry is already affected by two major changes, namely the implementation of compulsory ABS/CBS regulations from 1st April 2019 and the implementation of BS-VI emission regulations in 2020. As a result, prices are expected to increase significantly for even the entry-level two-wheelers in the market. The prices have already gone up significantly due to the compulsory 5 year insurance as well.
As a result, both companies have proposed the classification of motorcycles under the mass usage items category. Motorcycles are presently in the luxury items category. In case this proposal is approved, GST may come down to 18% from 28%. This reduction may help in making two-wheelers cheaper although it will only be temporary since the ABS/CBS implementation will lead to prices going up by anywhere between INR 3,000-12000 for most two-wheelers over and above their present price points. Additionally, the BS-VI emission regulations may lead to further price increases.
The lowering of GST may help in balancing off the impending increases in prices to some extent. This will ease some of the pressure on customers in the future. But the again the economics at play are beyond us, and how that change will effect the revenues towards the government is something that needs to be studied and balanced out.