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GST Reform Is Big Opportunity for OEMs

News: Indian Subcontinent

Home » News » Regions » Indian Subcontinent

2025-08-26

GST Reform Is Big Opportunity for OEMs

Aditya Kondejkar
Aditya Kondejkar

India is preparing for one of its biggest tax reforms in recent years, targeting the Goods and Services Tax (GST) structure. If approved, the proposal will slash GST on small cars and two-wheelers from 28% to 18% and reduce GST on insurance premiums to between 5% and zero. The change, expected around Diwali, has the potential to reshape production planning and sales strategies for automobile manufacturers.

Source: Reuters.    Read The Article

Impact on Small Cars and Two-Wheelers. Small cars and two-wheelers have traditionally been the backbone of India’s automobile industry, serving middle-class buyers who are highly price sensitive. However, in recent years, growth in these categories has slowed as buyers shifted toward SUVs, which now account for nearly half of passenger vehicle sales. By lowering taxes, the government aims to make small cars and two-wheelers more affordable, correcting the imbalance in demand and giving OEMs in these categories a much-needed boost.

Read More»
Categories: Commercial Vehicles, Indian Subcontinent, Legislation, Motorcycles, Recreational Products, Sales
Office: India Office

2025-07-26

India’s Used Car Market Shifts Toward Profitability

Aditya Kondejkar
Aditya Kondejkar

India’s used car market has entered a high-growth phase, reflecting a clear structural shift in consumer demand. After years of sluggish expansion, the segment grew 8% in FY25, with FY26 growth expected to touch 10%.

Sales volumes are set to cross the 6-million-unit mark this fiscal. The used-to-new car sales ratio has reached 1.4x, a significant increase from less than 1.0 five years ago. This growth is being driven by a rising preference for value-for-money mobility solutions, especially in a post-pandemic landscape where cost sensitivity remains high.

The used car segment is also increasingly seen as a reliable, first-choice option for new-age consumers, thanks to greater digital access and easier financing. These dynamics indicate that used vehicles are no longer a fallback option, but a mainstream choice for a broad swath of buyers.

Read More»
Categories: Indian Subcontinent, Passenger Cars, Minivans, and SUVs, Sales
Office: India Office

2025-05-25

Evaluating Mahindra’s Acquisition of SML Isuzu

Aditya Kondejkar
Aditya Kondejkar

Mahindra & Mahindra’s acquisition of a 58.96% stake in SML Isuzu for ₹555 crore marks a calculated push to expand its presence in the intermediate and light commercial vehicle (ICV and LCV) segments. With minimal exposure in the bus segment and a modest 3% market share in >3.5T CVs, this move is structured to unlock operational synergies, enhance platform capabilities, and fill existing product portfolio gaps.

Source: Mahindra.com    Read The Article

Mahindra & Mahindra’s (M&M agreement to acquire a controlling stake in SML Isuzu comes at a pivotal point in the Indian commercial vehicle (CV) industry, where demand is gradually recovering post-COVID and the LCV and ICV segments are projected to lead growth. The $64,824,000 USD (₹555 crore) investment—targeted via the purchase from Sumitomo Corporation and Isuzu Motors Ltd—positions M&M to double its CV market share from 3% to 6% immediately, with stated ambitions of reaching 10–12% by FY31 and 20% by FY36.

Read More»
Categories: Commercial Vehicles, Indian Subcontinent, Mergers & Acquisitions
Office: India Office

2025-04-20

Farm Mechanization Unlocks Productivity

Aditya Kondejkar

Farm mechanization in India is steadily evolving from being tractor-centric to encompassing a broader range of machines and technologies aimed at improving agricultural productivity and efficiency. Traditionally, mechanization was equated with the use of tractors, which replaced bullocks in tillage, sowing, and transport operations. The tractor gave Indian farmers a reliable source of power, allowing them to perform heavier and faster field tasks.

A typical pair of bullocks generates just about 1 horsepower (hp), while most tractors sold in India today are in the 41–50 hp range. With nearly 9 lakh units sold annually, tractors form the backbone of India’s farm power economy, contributing over ₹60,000 crore in value terms. Yet, the real shift lies in the rising demand for tractor-mounted and self-propelled farm machinery, driven by the need to overcome agricultural labor shortages and improve overall farm economics.

Read More»
Categories: Agricultural, Autonomous, Indian Subcontinent, PowerTALK, Production
Office: India Office

2025-03-20

Kubota Plans Tractor Plant in India, Doubling Production

Akihiro Komuro
Akihiro Komuro
Akihiro Komuro

Kubota plans to build a tractor factory in India, open that will be operational by 2030. The investment is expected to be in the tens of billions of yen. The annual production volume will be increased to approximately 240,000 units, double the current volume.

India accounts for about half of the global tractor market in terms of volume, but Kubota’s market share in the country is only about 25%. The company aims to increase sales by developing new products in cooperation with the local manufacturer it has acquired.

Currently, it produces about 120,000 units a year at three factories, including Escorts, which it acquired in April 2022 for about $953,020,000 USD (140 billion yen). Its production capacity is 170,000 to 180,000 units, but it is expected to fall short of that in the next five years.

Read More»
Categories: Agricultural, Indian Subcontinent, Japan, Production
Office: Japan Office

2025-03-18

US Tariffs Pressure India Automotive Sector

Aditya Kondejkar
Aditya Kondejkar

The US administration has been pressuring India to reduce its import tariffs on cars, but India remains cautious about making drastic changes. While there is some openness to lowering tariffs on imported cars, a complete removal of these duties is unlikely in the near future. The ongoing discussions between the two countries may lead to some tariff adjustments, but India’s primary concern is protecting its local industries.

Source: https://news24online.com/     Read The Article

PSR Analysis. Even if India were to reduce tariffs to zero, the impact on the domestic automotive market would likely be minimal. The duty differences are relatively small, and the risk of imports flooding the market is low. India’s automotive component sector, especially in areas like EV differentials, bevel gears, and crankshafts, has been growing steadily. This sector benefits from India’s low labor costs, significantly lower than countries like Mexico and the US, giving it a competitive advantage in global supply chains.

Read More»
Categories: Economics, Indian Subcontinent, Passenger Cars, Minivans, and SUVs
Office: India Office

2025-02-24

2025 Budget Pushes Green Mobility, Manufacturing

Aditya Kondejkar
Aditya Kondejkar

Aligned with the ‘Viksit Bharat’ vision, the 2025  budget proposes a forward-looking approach for the auto sector, fostering a sustainable ecosystem with financial allocations and duty exemptions. Among the highlights:

  • Support for EV Manufacturing. The exemption of customs duties on 35 capital goods for lithium-ion battery production is a commendable step toward reducing production costs and improving EV affordability.
  • Production-Linked Incentive (PLI) Scheme. The government allocated $325.31 million USD (Rs 2,819 crore), down from $403.90 million USD (Rs 3,500 crore) last year, which may raise concerns about the continuity of financial backing for emerging EV and hydrogen fuel cell technology.
  • Tariff Rationalization. Reduction of tariff categories to just eight simplifies the customs structure and promotes ease of business for auto manufacturers.
  • MSME Credit Boost. With increased access to credit for MSMEs in the auto component industry, supply chain development will strengthen, driving innovation and expansion. MSME stands for Micro, Small, and Medium Enterprises. This term refers to a significant sector of the Indian economy that plays a crucial role in the country’s economic development and growth.
  • Dhan-Dhaanya Krishi Yojana. Rural income growth via this scheme, along with increased Kisan Credit Card limits, is expected to boost demand for two-wheelers, tractors, and small commercial vehicles.
Read More»
Categories: Economics, Indian Subcontinent, Passenger Cars, Minivans, and SUVs
Office: India Office

2025-01-27

Infrastructure Spending Seen Boosting CV Demand

Aditya Kondejkar
Aditya Kondejkar

“Looking ahead, we expect the gradual increase in infrastructure spending to boost consumption and improve demand, a revival across most CV segments, particularly in buses and vans, which are set to outperform last year’s levels. Intermediate, light and medium commercial vehicles (ILMCVs) are also likely to record similar or improved growth compared to fiscal year 2024.” – Girish Wagh, executive director at Tata Motors

Source: AutocarPro    Read The Article

Market Dynamics and Growth Segments
The CV industry is set to benefit from the government’s pro-growth policies, particularly in infrastructure. The increased Capex outlay of  US$115.5 billion ( ₹10 trillion) in the Union Budget 2023-24 is driving growth in sectors such as steel, cement, mining, and construction, which are key consumers of CVs.

Read More»
Categories: Construction, Economics, Financial, Indian Subcontinent, Legislation, PowerTALK, Production
Office: India Office

2024-12-13

Tractor Industry Sees H2 2024 Revival

Aditya Kondejkar
INDIA REPORT
Aditya Kondejkar

The Indian tractor industry, which faced a stagnant first half of the fiscal year, is pinning its hopes on a robust second-half performance. With favorable developments like healthy reservoir levels, improved minimum support prices (MSPs), and a positive outlook on the Rabi crop, manufacturers are optimistic about achieving double-digit growth by the year-end.

H1 Performance: A Mixed Bag
In the first half of the fiscal year, tractor sales remained flat, growing marginally to 472,000 units from 469,000 units in the same period last year. The industry’s decline in FY2024 to 876,000 units, following a record-breaking FY23 at 945,000 units, underscores the impact of a high base effect, weak precipitation, and uneven monsoons. A shift in the festive calendar, with Diwali and Dhanteras occurring later this year, also affected demand in the early months.

Read More»
Categories: Agricultural, Indian Subcontinent, PowerTALK, Production
Office: India Office

2024-11-16

Ashok Leyland Expects Strong Export Performance

Joe Delmont
Aditya Kondejkar

“Our next target in terms of geographical expansion is Southeast Asia. We have been talking about it for a long time. We want to get into four different markets in Southeast Asia. “We expanded our range of products (in Middle Eastern markets) and that is why as a result we believe we should be in a position to record one of the best years when it comes to international operations” – Shenu Agarwal, Managing Director and CEO

Source: Economic Times. Read The Article

Ashok Leyland is intensifying its international expansion efforts, setting its sights on Southeast Asia to drive export growth in the coming year. This strategic push is part of a broader plan to strengthen its presence outside India while maintaining strong domestic sales. The company has already launched operations in the Philippines, with Malaysia lined up next, aiming to establish a firm foothold in the region.

Read More»
Categories: Agricultural, Indian Subcontinent, PowerTALK, Production
Office: India Office

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