Royal Enfield head honcho expressed his grave concern on increasing the GST to 40 percent on motorcycles with engine capacity above 350cc.
Last week, we reported to you that the Indian government is rolling out the restructured version of the Goods & Service Tax (GST) with only two slabs in the form of 5 percent and 18 percent. This simplification of the tax structure eliminates the 12 percent and 28 percent categories while introducing a 40 percent tax slab for luxury goods. PM Narendra Modi had announced in his address to the nation from Red Fort on Aug 15 that GST 2.0 will be rolled out ahead of Diwali 2025.
Reportedly, the bikes below 350cc engine capacity, which presently attract 28 percent tax, will be included in the 18 percent slab and hence making them cheaper than now. However, the motorcycles above 350cc engine which are currently taxed at 31 percent are proposed to put in the 40 percent slab, thereby making them more expensive.
Siddhartha Lal, Executive Chairman, Eicher Motors Ltd, the parent company of Royal Enfield, has requested the Union govt to reconsider its decision of taxing the big bikes at 40 percent. In a series of posts on his official Instagram handle, Sid Lal wrote that uniform GST on all two-wheelers is the need of the hour to secure India’s global leadership position in the two-wheeler market.
Lal further added that India’s two-wheeler industry is the biggest success story of ‘Make in India’initiative while being the only manufacturing sector where the India-based brands are global leaders. As per the post shared on Instagram by Lal, the strength of Indian two-wheeler brands have even compelled the global brands to start local production in India.
Lal emphasized on the need of a uniform GST on all two-wheelers, irrespective of their engine capacity. While under the GST 2.0, the best-selling company models below 350cc such as the Bullet, Classic and Meteor will become highly affordable, the 450cc and 650cc bikes with 40 percent GST will be highly expensive and thus further drift the buyers away.
Royal Enfield has a wide portfolio of midsized (450cc and 650cc) motorcycles which comprises highly popular models like the Himalayan 450, Guerrilla 450, Super Meteor 650, Bear 650, Shotgun 650 and Interceptor 650 among others. Furthermore, the brand is readying an even bigger portfolio of 750cc motorcycles, of which two motorcycles have already been spotted testing namely Himalayan 750 and Continental GT-R 750. Lal opined that bikes above 350cc engine capacity cannot be considered luxury goods, instead they should be seen as an efficient and affordable alternative to cars.
The RE Boss stated that a split tax regime will result in choking the investment required for India to compete globally while relegating the two-wheeler brands to smaller capacity bikes. In what appeared to be more of a concern and warning, the Eicher Motors Chairman implied that rival brands from other countries will seize the midsized segment in international markets and then penetrate into the smaller bike segment where India is the leader today.
