Tata, M&M Shares Dip Amid Concerns Over Proposed GST Hike on Luxury EVs

Rapid Summary

• Reports suggest the Group of Ministers (GoM) panel has proposed raising GST on luxury electric vehicles ahead of the September 3-4 Council meeting.
• Proposed GST changes include:

– EVs priced between Rs 20 lakh and Rs 40 lakh: increase to 18% from the current 5%.
– evs above Rs 40 lakh: increase to either a new luxury slab of up to 40% or existing rates at around 28%.

• Shares of automakers impacted: Tata Motors (-1%), Mahindra & Mahindra (-2%), Hyundai (-0.2%).
• Higher taxes could impact high-end EV makers such as tesla, Mercedes-Benz, BMW, and BYD-operators in India’s premium EV market.
• Domestic players like Tata Motors (40% market share) and M&M (18%) focus primarily on less expensive models but may see slowed overall demand for EV adoption.
• Passenger vehicle sales dipped in August as buyers delayed purchases anticipating tax hikes under the forthcoming GST framework.

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indian opinion Analysis

The proposed adjustments to GST rates on premium electric vehicles represent a significant policy pivot that could reshape India’s budding green mobility sector. On one hand, increasing levies for luxury segments may reduce accessibility for global brands like Tesla and BMW that cater to affluent customers. However,it could preserve incentives for India’s mass-market companies dominating lower-price brackets.While Prime Minister Modi emphasized simpler tax structures during his Independence Day address, these revisions highlight ongoing complexities in balancing fiscal priorities with environmental goals. With domestic leaders such as Tata Motors holding significant market share in affordable EV categories, higher taxes may marginally impact them but dampen larger enthusiasm toward overall adoption.

The timing is particularly delicate; dip in passenger vehicle sales underscores consumer hesitance influenced not just by potential costs but lack of clarity surrounding policy decisions-a signal policymakers must consider carefully during Council deliberations.