The Ministry of Heavy Industries on December 09, 2025 highlighted the positive impact of the Goods and Services Tax (GST) rate rationalisation on the automobile and transportation equipment sector. Responding to Starred Question No. 131 in the Lok Sabha, the Minister of Heavy Industries, Shri H. D. Kumaraswamy, presented key data indicating substantial growth in the sector following the GST reduction.
41.3% Growth in Vehicle Sales
As per the Vahan portal, total vehicle sales in October 2025 increased by 41.3% compared to the same month last year.
- October 2025: 40,55,559 vehicles sold
- October 2024: 28,70,120 vehicles sold
This surge reflects enhanced market activity following the reduction of GST rates across several categories.
Boost to ‘Make in India’ and Domestic Manufacturing
The Minister stated that the rationalisation of GST from 28% to 18% for:
- Small passenger vehicles
- Three-wheelers
- Motorbikes up to 350 cc
- Commercial goods-transport vehicles
- Parts of automobiles and two-wheelers
has led to lower vehicle prices, resulting in higher domestic sales. This demand uptick is expected to:
- Improve competitiveness of Indian manufacturers
- Strengthen economies of scale in local production
- Support India’s broader ‘Make in India’ initiative by making domestic manufacturing globally competitive
Benefits Passed on to Consumers
The Ministry confirmed that OEMs have passed on the benefits of reduced GST rates to consumers, thereby making vehicles more affordable and increasing competition within the domestic automobile industry.
The Reply can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2025/12/Impact-of-GST-Reduction-on-Automobile-and-Transportation-Equipment-Sector.pdf
