Shares of Hero MotoCorp surged 8.16% on Monday, August 18, closing at ₹5,092.20 after reports indicated that the Indian government is preparing a major overhaul of the Goods and Services Tax (GST) structure by Diwali. Under the proposed framework, the GST rate on two-wheelers could be reduced to 18% from the current 28–31% for larger engine models.
The broader “GST 2.0” initiative aims to simplify the tax system by eliminating the 12% and 28% tiers, leaving just two slabs—5% for essentials and 18% for standard goods. If implemented, this reform would make two-wheelers more affordable during the festive season, a development that has been long sought by the automobile industry.
The Society of Indian Automobile Manufacturers (SIAM) has consistently urged the government to lower GST on conventional two-wheelers to 18%, and also suggested additional relief for alternative-fuel models such as CNG and flex-fuel offerings. Industry leaders including Hero MotoCorp and Honda Motorcycle & Scooter India (HMSI) have welcomed the proposal, noting that two-wheelers are essential for mass mobility and should not be taxed as luxury goods.
Economists have also backed the plan, suggesting that a lower tax rate would enhance consumer purchasing power, boost demand in the affordable automotive segment, and help ease the current slowdown in two-wheeler sales. The move could particularly benefit rural and middle-income households, where motorcycles and scooters are critical modes of transport.
Hero MotoCorp’s sharp rally reflects investor optimism that the policy shift, if cleared, would drive significant sales growth for the sector’s leading players. The company’s market capitalisation stood at ₹1.02 lakh crore following Monday’s gains.
