Lok Sabha Question No. 268 (STARRED), answered on 2025-12-18
Subject: Impact of GST Rationalisation on Automobile Sector
Ministry: ROAD TRANSPORT AND HIGHWAYS
Asked by: Shri Ashish Dubey, Shri Miteshbhai Rameshbhai Patel

## be pleased to state:

- (a)  whether the Government has carried out any assessment of the  likely  impact  of  the  recent  GST  rationalisation  on  the affordability of two-wheelers, passenger vehicles, tractors, buses and commercial goods vehicles;
- (b) if so, the details thereof;
- (c)  the  likely  impact  of  the  revised  GST  structure  on  vehicle demand,  fleet  renewal  and  the  expansion  of  public  transport services across the urban and rural areas;
- (d)  whether  any  analysis  has  been  made  with  regard  to  the impact of the said changes on logistics efficiency, freight rates and transport operating costs; and
- (e) if so, the details thereof?

## ANSWER

THE MINISTER OF ROAD TRANSPORT AND HIGHWAYS

(SHRI NITIN JAIRAM GADKARI)

- (a) to (e) A statement is laid on the Table of the House.

## GOVERNMENT OF INDIA

## MINISTRY OF ROAD TRANSPORT AND HIGHWAYS

## LOK SABHA STARRED QUESTION NO. 268 ANSWERED ON 18 th  DECEMBER, 2025

## IMPACT OF GST RATIONALISATION ON AUTOMOBILE SECTOR

*268. SHRI ASHISH DUBEY:

SHRI MITESHBHAI RAMESHBHAI PATEL:

Will the Minister of ROAD TRANSPORT AND HIGHWAYS

सड़क परिवहन औि िाजमार्ग मंत्री

STATEMENT REFERRED TO IN  REPLY  TO  PARTS  (a)  TO  (e)  OF  THE LOK  SABHA  STARRED  QUESTION  NO.  *268  FOR  ANSWER  ON  18 th DECEMBER, 2025 ASKED BY SHRI ASHISH DUBEY AND SHRI MITESHBHAI  RAMESHBHAI  PATEL  REGARDING  IMPACT  OF  GST

RATIONALISATION ON AUTOMOBILE SECTOR. (a) & (b) The new GST rates  came into effect from 22nd of September 2025. As per data at Vahan portal, there has been 29.1% increase in the total number of vehicles registered (except the State of  Telangana)  in  October  2025  vis-à-vis  corresponding  month  of  the previous year. (c) to (e) As per information received from Society of Indian Automobile Manufacturers (SIAM), the vehicle demand is likely to raise based on sales pattern of last 3 months as lower GST reduces on-road prices  of  the  vehicles,  financing  cost  and  road  tax  levied  on  the vehicles  which  is  encouraging  for  first  time  buyers  and  rural  buyers who are more price sensitive. The commercial vehicle segment has also benefited significantly from the reduction in GST rates from 28% to 18%. In addition to generating incremental  sales  of  new  buses  and  trucks,  this  rationalisation  is expected to stimulate replacement-led demand, thereby accelerating fleet renewal. The  Government  through  Voluntary  Vehicle  Modernisation  Program (VVMP) has already provided a policy framework to encourage vehicle replacement, including state road tax concessions, waiver of registration  fees  and  automobile  manufacturer-led  incentives  for  the purchase of new  vehicles against the scrappage of old ones. The additional impetus provided by lower GST rates further strengthens  the  business  case  for  transport  operators  to  undertake fleet modernisation. This renewed focus on fleet renewal is also expected to contribute to the  expansion  and  improvement  of  public  transport  services  across both  urban  and  rural  areas,  enhancing  mobility,  increase  in  logistic efficiency and service reliability. Increased movement of goods,driven by higher vehicle availability and affordability, will further enhance logistics efficiency and contribute to a reduction in freight rates, thereby lowering the overall transportation cost.

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