Transport Minister Nitin Gadkari to Car Industry: Don't Ask for GST Reduction

Lately, we have been hearing reports about car manufacturers asking for a reduction in import duties on EVs in India. Recently, Union Minister Nitin Gadkari attended an event in Delhi, where he clearly asked the car industry not to perennially demand a reduction in taxes, as the government needs these funds to implement welfare schemes for the poor in the country.

The Union Minister for Road Transport and Highways said, “Do not ask for reducing Goods and Services Tax (GST) and taxes; it is a continuous process that is going on. If we reduce the tax, you will ask for more because this is human psychology.” He added that the government also has its limitations. Even if they wanted to reduce taxation, they couldn’t because doing so would make it extremely difficult for the government to run a welfare state. He also stated that the government’s vision is to tax the rich and provide benefits to the poor.

As usual, Nitin Gadkari spoke about the need to reduce imports and increase exports to make India a developed nation. He also mentioned that India's logistics cost, which currently stands at around 14-16 percent, will be reduced to 9 percent in the next two years. However, he didn’t explain how this goal would be achieved. He also emphasized that India needs to work on reducing the cost of production without compromising quality.

Coming back to the tax reduction statement, this is probably the first time we have heard Nitin Gadkari speak in such a manner. In the past, Gadkari himself has spoken about tax reduction and even stated that the government was working on reducing taxes.

As we already know, Nitin Gadkari is a strong promoter of flex fuels, hybrids, and EVs. On several occasions, he has mentioned his efforts to make these vehicles cheaper by reducing the GST on them. He has even spoken about reducing GST on flex-fuel vehicles to decrease import dependency. The minister’s recent statement is completely opposite to what he has been promising the public and manufacturers.

In this statement, he speaks about the automobile industry as a whole and is not referring specifically to ICE vehicles, EVs, or hybrids.

Currently, reports suggest that the government is working on a new EV policy that would lower the cost of EVs in India. The import duty on EVs is expected to decrease from 110 percent to 15 percent.

This would encourage more foreign brands like Tesla to enter the Indian market. However, many Indian manufacturers are opposing this move, as it would give international brands an advantage, allowing them to introduce aggressively priced products in the market.

The Indian government is also inviting many manufacturers to set up production facilities in India. This initiative would benefit the Indian market by generating more jobs while enabling manufacturers to produce world-class products at a lower manufacturing cost.

While the Union Minister has denied GST reductions for the auto industry, it remains unclear whether the government will maintain the same stance for manufacturers in the EV sector.