Royal Enfield's Siddhartha Lal Bats For Uniform 18% GST On All Two-Wheelers

Siddhartha Lal, executive chairman of Eicher Motors Ltd., appealed the government to adopt uniform goods and services tax for all two-wheelers.

In a post on Instagram, Lal said a common GST rate of 18% will enable India to maintain its edge in the global two-wheeler market.

"Success abroad requires a wide and competitive product range. A punitive GST on above 350cc would relegate us to smaller capacity two-wheelers, and undermine Indian brands' ability to build strong dealer networks and brand equity worldwide," said the chief of Eicher Motors, the company manufacturing the Royal Enfield motorcycles.

Lal's appeal comes ahead of the GST Council meeting on Sept. 3-4, when the Group of Ministers' proposal to cut tax slabs would be taken into consideration. The GoM has proposed for only two slabs—5% and 18%—which would lead to the elimination of 12% and 28% slabs.

In addition, an additional 40% slab could be considered for select luxury goods. As per reports, this may include two-wheelers of engines above 350 cc. If such a proposal is accepted, then it may end up raising the on-ride prices of Royal Enfield motorcycles.

"A differential rate would dramatically shrink the domestic above 350cc segment, and choke the investment needed for India to compete globally," the Royal Enfield manufacturer's executive chairman said in his post.

Rivals from countries without "such distortions" would seize the mid-size segment internationally, then push back into the smaller-capacity market where India currently leads, Lal further added.