MHI backs SIAM proposal for reducing GST on CNG-powered two wheelers

Ministry of Petroleum and Natural Gas (MoPNG) along with other key ministries also endorse the proposal

The ministry of heavy industries (MHI) has thrown its weight behind a proposal by Society of Indian Automobile Manufacturers (SIAM), supporting their request for a reduction in GST on CNG-powered two wheelers from the current 28 per cent to 18 per cent and then to 12 per cent in stages.

 

The key beneficiary of the move could be Bajaj Auto, which has already launched a CNG-powered motorcycle in the market. However, other companies like TVS are also considering entering the space.   

 

 

The Ministry of Petroleum and Natural Gas (MoPNG) has gone even further and also pushed for a similar reduction in GST for CNG-powered passenger cars, besides endorsing a reduction in CNG two wheelers also in their response to the proposal.

 

However, MHI is silent on the MoPNG request for reduction of GST on CNG passenger cars in the letter, and SIAM in its communications has made it clear that the submission they have made is only for the two-wheeler segment.

 

The letter sent on January 1, 2025 to the revenue secretary in the finance ministry has pointed out that the proposal also has the endorsement of other key administrative ministries, which include Ministry of Road Transport and Highways led by Minister Nitin Gadkari, who had initially mooted such a move, and Ministry of Environment, Forest and Climate Change.

 

The MoPNG also added that it would also request for a decrease of GST on CNG-powered cars. In its communication, it also supported the proposal saying that reduction in GST for CNG two wheelers will help to maximise their penetration across the country, as it would stimulate sales and help in getting India closer to its carbon neutral ambition.

 

MHI has also pointed out that the proposal on CNG two wheelers also had the endorsement of Automotive Research Association of India, which has opined that “CNG two wheelers should be considered for lower GST”.

 

SIAM has made a plea to reduce the base duty on two wheelers from 28 per cent to 18 per cent. On internal combustion engine (ICE) flexi fuels and ICE CNG two wheelers, it has submitted that GST be reduced to 18 per cent till that time when two wheelers have a 28 per cent GST. However, once the GST duty is reduced for all two wheelers to 18 per cent, it has been suggested that for ICE flexi fuels and CNG two wheelers, it should be further reduced to 12 per cent.  Bajaj Auto’s CNG bike has seen an enthusiastic response. The company has already registered as many as 38,172 CNG-powered bikes since its launch in July last year till December end.