New Delhi: The Indian government is preparing to implement significant changes to the Goods and Services Tax (GST) structure ahead of Diwali, aiming to simplify the current multi-tier system and provide relief to consumers. The proposed reforms are expected to reduce taxes on smaller two-wheelers and clothing, while increasing rates on premium motorcycles.
Under the proposed GST changes, motorcycles and scooters with engine capacities up to 350cc will see a reduction in GST from 28% to 18%, making them more affordable for buyers during the festive season. Conversely, larger motorcycles above 350cc could see GST rise from 31% to 40%, potentially increasing the cost of premium two-wheelers.
The automotive industry has voiced mixed reactions. Royal Enfield has called for a uniform 18% GST across all two-wheelers to simplify the tax system and maintain competitiveness, while BMW Group India has requested clear guidelines on the new rates to avoid uncertainty affecting sales.
In the apparel sector, the government is considering a uniform 5% GST rate for all garments, replacing the current structure of 5% for garments below ₹1,000 and 12% for those above. Clothing industry bodies, including the Clothing Manufacturers Association of India (CMAI) and the Northern India Textile Mills Association (NITMA), have advocated for this change, stating that it would simplify compliance and support the industry amid high US tariffs and declining global competitiveness.
The GST Council is scheduled to meet on September 3–4, 2025, to finalize the proposed rates. Officials aim to implement the revised GST structure before Diwali to stimulate demand and provide economic relief to consumers across key sectors.
These reforms, if approved, are expected to have a substantial impact on both the automotive and textile industries, influencing pricing, sales patterns, and consumer purchasing behavior in the coming months.