GST rate revision to lower acquisition cost, boost 2W industry: TVS Motor

Mumbai, Sep 9 (PTI) The reduction in the GST rates is expected to boost the domestic two-wheeler industry with a lower cost of acquisition, which had gone up to 40-50 per cent owing to multiple new regulations in the last six years, TVS Motor said on Tuesday.

The Chennai-based two-wheeler maker, which rolled out its 149.77-cc hyper-sport scooter NTORQ with a price tag of Rs 1.19-lakh (ex-showroom), also said that this year's festive season may turn out to be the best-ever on record, aided by the GST rate cuts.

"We had also seen over the previous six years, the cost of acquisition of two-wheelers had gone up by 40-50 per cent due to various kinds of regulations that had come in. This (lower GST rates) is a huge reset on that.

"So again, there is competitiveness, affordability, and access to the common man for mobility going to get far better. With this, we see the industry to do well," Aniruddha Haldar, Senior VP and Head of Commuter and EV Business at TVS Motor, said.

Since these GST reforms are going to be across the board, even within the industry, TVS is also expected to do better on account of its widest portfolio of two-wheelers, which comprises not just bikes for premium, commuter and economy segments, but scooters and EVs, Haldar said.

Under the new GST regime, which will be applicable from September 22, the first day of Navratra, petrol, LPG and CNG vehicles of less than 1,200 cc and not more than 4,000 mm length and diesel vehicles of up to 1,500 cc and 4,000 mm length would move to the 18 per cent rate from the current 28 per cent.

Motorcycles up to 350 cc would be taxed at a lower GST of 18 per cent against 28 per cent currently while all automobiles above 1,200 cc and longer than 4,000 mm as well as motorcycles above 350 cc and racing cars will be charged with a 40 per cent levy.

Small hybrid cars will also benefit, while EVs will continue to be charged at 5 per cent.

Haldar said that the internal combustion engine-powered scooter and electric scooter segment alone accounts for about 39, or almost 40 per cent -- about 32 per cent ICE scooters and 7 per cent electric scooters -- in the overall two-wheeler segment.

"And I think that is the direction in which we are going to go, because as our infrastructure, urbanisation and the participation of women in the workforce improve, all of that is pointing towards a much stronger scooterized environment on the Indian road," he said.

This year, with this festive season coming in, what we are looking forward to is possibly going to be one of the best festive seasons that has happened on record because in time for the festive season to have this kind of a change, and that too happening not only for one industry," he said.

He said that TVS Motor is going to pass on the entire GST benefit to the consumer across its range.

Noting that the scooter segment has been growing at a very fair clip, he said the two-wheeler industry in the last 3 years has been growing at a compounded annual growth rate (CAGR) of 2 per cent, while the scooter segment has grown 3 times this.

Sporty scooter within that has grown twice of the overall scooter segment, he said, adding "this is really a very strong growth driver of the total two-wheeler industry per se, which is why we are adding (150-cc NTORQ) to our portfolio. We created this (sporty) segment and now with 150-cc we are looking for a greater presence." Haldar said the company has invested around Rs 100 crore in the NTORQ 150-cc scooter. PTI IAS MR