India rationalizes GST rates so as to make automobiles affordable and to increase manufacturing, jobs, MSMEs and Aatmanirbhar Bharat's growth vision.

The Government of India has announced a significant GST rate rationalization to give a boost to the automobile and its ancillary sectors. The move is in line with initiatives such as Make in India, the Fibre Optic Part III policy protecting private entities, the Production Linked Incentive (PLI) scheme, the National Logistics Policy, etc. to modernize infrastructure and promote innovation.

The revised GST taxes include two-wheelers, small to luxury cars, buses, tractors and automobile components. For example, the tax on two-wheelers has been levied from 28% to 18% recently, making bikes more affordable to farmers, gig workers and youth. Similarly, tractors less than 1800 cc are currently subjected to only 5% GST, down from 12%, which is a big boost to agricultural mechanization.

By having lower prices across the board, it is the hope of the government that they will achieve higher demand, job creation and broader MSME participation in the automobile supply chain. With more than 3.5 crore jobs directly and indirectly linked with the sector, a lot will stand to gain from the industry, whether it's manufacturing, sales, or maintenance.

The reforms are also expected to promote financial inclusion, as the purchases of miles are based on cheap credit, which will increase the ownership rate of vehicles in semi-urban and rural areas. Additionally, the lower costs of commercial goods vehicles and buses will increase logistics efficiency and public transport and relieve inflationary pressures.

This rationalization represents a significant milestone to make India's automobile industry globally competitive and give a fillip to the dream of Aatmanirbhar Bharat.