The Goods and Services Tax (GST) rate cut on vehicles will inject fresh growth momentum into the Indian automotive sector, making vehicles more affordable in the entry-level segment, according to Shailesh Chandra, president of the Society of Indian Automobile Manufacturers (SIAM).

“The automobile industry is immensely grateful to the government on the recent landmark decision to reduce GST rates on vehicles which will bring renewed cheers to consumers and inject fresh growth momentum into the Indian automotive sector, making vehicles more affordable in the entry-level segment,” Chandra said at the SIAM Annual Convention 2025.

“This will significantly benefit the first-time buyers and middle-income families in a broader access to personal mobility,” he added.

In FY25, the Indian auto industry continued its steady performance across domestic markets as well as exports, said Chandra. “Passenger vehicles recorded the highest-ever sales of 4.3 million units with growth of 2% over the previous year. Exports also achieved their highest levels at 7,70,000 units, registering a robust 16.% increase year over year,” he said.

The two-wheeler segment continued its recovery with domestic sales growing by 9.1% to reach 19.6 million units, though it is still below the earlier peak of which was achieved in 2019, said the SIAM president. “Exports stood at 4.2 million units, registering growth of 21.4% over the previous year,” he added.

The three-wheeler industry achieved domestic sales of 7.4 lakh units, surpassing its earlier peak of 7.01 lakh units in FY19, with a growth of 6.7%, Chandra said, adding that exports also increased by 2.3% to 3.1 lakh units.

“The commercial vehicle industry registered a marginal de-growth of -1.2% in domestic sales, closing the year at 9.57 lakh units while exports grew by 23% to 81,000 units,” said Chandra.

On localisation of critical components, Chandra said the auto industry in collaboration with component manufacturers has intensified efforts in identifying critical components and encouraging domestic manufacturing.

India’s auto industry contributes ₹3.37 lakh crore to India’s GDP and provides livelihood to 30 million Indians, said Chandra.