Sudarshan Venu, joint managing director of TVS Motor, on Wednesday said the government's proposed GST rate cut decision is a welcome move and it will certainly push the demand, if implemented.
TVS Motor stock was up by 4.06 per cent to Rs 463.90 on Wednesday after Finance Minister Nirmala Sitharaman said the Goods and Services Tax (GST) Council would look into the auto industry’s demand for lowering the tax rate on two-wheelers, which are now taxed at the highest slab rate of 28 per cent.
“Since two-wheelers are neither a luxury nor a sin product, they merit a rate revision. Consequently, this will be taken up with the GST Council,” Sitharaman said during an interaction with members of the Confederation of Indian Industry (CII) yesterday.
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Speaking to Business Standard Sudarshan, Venu said, "We appreciate the FM's clarification that this is not luxury good. We look forward to the GST notification soon, so that the customer can get benefit out of it. We are confident that it will increase the demand. In the current circumstances it will provide a more affordable form of mobility."
On whether it should be announced before the festival season sales kicks off, he said, "The sooner the better so that it can improve the demand. There is a huge amount of penetration potential for two-wheelers in India. Huge head room is available and this (GST rate cut) will help to capitalise it."
Demand is better month on month, August volume will be better than July, said Venu.
Two-wheeler sales in the country fell 15% y-o-y in July 2020. In contrast, the decline in retail two wheeler sales was much higher at 37% y-o-y.