NEW DELHI: Bajaj Auto managing director Rajiv Bajaj on Friday said auto sector is suffering from ‘over-regulation’ and this has led to a sharp rise in selling prices, making the product unaffordable for many. Bajaj also questioned the rate of taxation on two-wheelers, especially the commuter segment ones.
He said motorcycles that cater to the common citizen are levied a goods and services tax (GST) rate of 28%, which is very high compared to other developing markets.
“Why do we have to pay a GST of 28% on vehicles that the ‘aam aadmi’ uses…In most developing countries, including Asean and Latin American nations such as Brazil, the middle- to lower-end motorcycles fall in the tax bracket of 8 to 14%,” said Bajaj on the sidelines of the launch event of the new 400cc Pulsar motorcycle.
While Bajaj welcomed the introduction of BS-VI and other policy measures to cut emissions, he said making ABS compulsory is also a regulatory overkill.
“On one hand we want regulations at the highest level in terms of emissions, which is fine. But then the government should reconsider the GST at 12-18% and not at 28%,” said Bajaj. Not only Bajaj, but other players in the industry as well have been seeking a rate cut for two-wheelers from the government to boost sales which are yet to bounce back to pre-Covid levels. FADA, the automobile dealers association body, had written a letter to the Road Ministry in 2023, asking for a GST rate cut for two-wheelers, predominantly within the 100-125cc segment which accounts for more than two-thirds of total two-wheeler sales.
FADA had cited that due to rising cost of raw materials, stricter emission norms and higher taxes, the price of the popular Honda Activa has escalated from Rs 52,000 in 2016 to Rs 88,000 in 2023. Bajaj Pulsar has witnessed a substantial increase in price from Rs 72,000 in 2016 to Rs 1.5 lakh last year.
The government, meanwhile, hasn’t shown any interest or hinted at lowering the GST rate on two-wheelers. Tax experts feel lowering GST rates on two-wheelers will have a significant impact on the government’s overall GST collection in the short term. Bajaj Auto on launched its biggest Pulsar brand bike, the Pulsar NS400Z, which comes with an introductory price of Rs 1.85 lakh.