By Aswin Kumar, Program Manager, Mobility Practice, Frost & Sullivan

1. Possible Reduction in GST to boost short term demand

The auto industry is going through a lean patch (passenger vehicle sales dropping in April, by a margin not seen since the last 8 years) due a number of factors including high cost of ownership, increase in insurance prices, NBFC credit crisis, lack of white collar job creation in urban centers etc. With the advent of BS VI and new safety norms, we can expect price of vehicles to go up by another 10-15% post April 2020, which can cause a further slowdown in the demand. With these factors in mind, the auto industry expects the government to cut goods and services tax (GST) on cars and scooters and bikes from 28% to 18% to reduce pricing pressure and boost short term demand.

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