New Delhi, 12 September (IANS). GST reform will increase the demand for vehicles in the country. In addition, the industry of auto sector such as tires, batteries, glass, steel, plastic and electronics will also benefit. This information was given by the government.
The government said that the growing sales of vehicles will create a multiplier effect for the economy. This will boost MSME supply chain. The government has cut tax on bikes less than 350 cc, small luxury car and tractor less than 1800 cc and auto parts.
According to the government, the auto industry provides more than 3.5 crore direct and indirect employment in the fields of manufacturing, sales, finance and maintenance. Increased demand will provide new recruitments in dealerships, transport services, logistics and components MSMEs. Employment of informal sector such as driver, mechanic and small service garages will also increase by cutting GST.
Decrease in GST will reduce bike prices, which will make them more accessible to youth, professionals and lower-middle class families. This is expected to help and promote the saving of Gig workers through the cost of loans of two -wheelers and reduction in EMI.
Affordable category cars will become cheaper, which will encourage the car buyers for the first time and expand domestic mobility. Decreased GST will promote sales in small cities and towns where small cars are dominated.
Excess sales will benefit car dealerships, service networks, drivers and auto-finance companies.
Removing additional cess has not only reduced rates, but also taxation has also become simple and predicted.
The government said, “Even at 40 percent, lack of cess will reduce the effective cars on large cars, which will make it relatively more economical for ambitious buyers. Bringing tax rates up to 40 percent and removing cess will also ensure that these industries would be fully ITC’s characters, whereas earlier ITCs could be used only up to 28 percent.”
India is one of the world’s largest tractor markets and GST cuts will increase demand in both domestic and export sectors. The parts required for tractor construction like tires, gears etc. will also be taxed only 5 percent.
Assistant MSME making engines, tires, hydraulic pumps and spare parts will get the benefit of higher production. GST cuts will also strengthen the situation as India’s global tractor manufacturing center.
Increasing power of tractors will increase mechanization in the agriculture sector. This will improve the productivity of major crops like paddy, wheat etc.
Trucks are the backbone of India’s supply chain (65–70 percent of the freight transportation). Reduction in GST reduces the initial capital cost of trucks, which will reduce the transportation rate per tonne.
This will further make the movement of agricultural products, cement, steel, FMCG and e-commerce delivery and will reduce inflation pressure. This shortage will also benefit MSME truck owners, which are a large part of India’s road transport sector. Cheap trucks will directly help reduce logistics costs, which will improve export competition. These steps are in line with the goals of Prime Minister’s speed power and National Logistics Policy.
-IANS
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