Updated on: Sept 09, 2025 12:12 pm IST
India’s automakers, led by Mahindra & Mahindra, have emerged as the biggest winners as new GST rates on cars have reduced by as much as 10 percentage points.
India’s automakers, led by Mahindra & Mahindra Ltd., have emerged as the biggest winners of GST reforms, as the likelihood of a sales boost lifted their profit outlook.
The Nifty Auto index has gained 12.5% since Prime Minister Narendra Modi announced his government’s move to rationalise the goods and services tax. The benchmark Nifty 50 index gained 1% over the same time period, as the imposition of 50% US tariffs on 27 August weighed on the wider market.
Mahindra & Mahindra Ltd., which has offerings from SUVs to tractors and farm equipment, led the rally among automakers, with its share price rising more than 15% this month, while Eicher Motors Ltd. and TVS Motor Co. Ltd. also surged.
In all, India’s auto stocks—not just those in the Nifty Auto index—have added about $33 billion in market capitalisation in less than a month, according to BSE data.
On 4 September, the GST Council led by Union Finance Minister Nirmala Sitharaman, reduced GST by at least 10 percentage points on hundreds of items—from small cars to soaps—in India’s biggest tax reform in 2017.
GST on small cars—those less than 4 metres in length and engine capacity less than 1,200 cc (petrol) and less than 1,500 cc (diesel)—reduced to 18% from 28% earlier. SUVs will attract a flat 40% GST now, as against 28% GST plus a cess that increased total tax incidence to as high as 50%.
“Exciting times lie ahead for the auto sector,” ICICI Securities’ Mumbai-based analyst Shashank Kanodia told Bloomberg. He sees demand boost for price-sensitive segments such as entry-level cars, as automakers start lowering prices following the tax cuts.
