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1h ago

India Overhauls Auto GST as Markets Rally on New 5%–18%–40% Framework

Brokerages flag tractors as the clearest near-term winner.

Automobile stocks | Image: Republic
Auto stocks, GST cut: M&M, Bajaj Auto key gainers; Tata Motors, MSIL & others to benefit too
Indian Auto Sector Surged
GST cut impact: Escorts, M&M, Eicher lead auto stock rally, gain up to 14%; top picks

Overview

  • The restructuring removes the compensation cess, scraps the 12% and 28% slabs, retains 5% and 18%, and adds a 40% rate for luxury and high-end vehicles.
  • Electric vehicles, tractors up to 1,800cc and related parts fall to 5%, most mass passenger vehicles and two- and three-wheelers move to 18%, and premium cars and high‑cc motorcycles shift to 40%.
  • The BSE Auto index rose more than 2% to an intraday high near 59,704, with Escorts up about 13.5%, M&M up roughly 6.4%, Eicher higher by around 2–3%, and Tata Motors gaining about 2%.
  • Analysts expect a correction in vehicle prices that could lift demand, with MOFSL naming Maruti Suzuki and M&M as top picks and citing Endurance, SAMIL and Happy Forgings among preferred ancillaries.
  • Emkay Global highlights the cut for tractors and agri‑machinery to 5% from 12% as a direct boost to affordability for farmers that could support rural equipment sales.