GST 2.0 gave economy buffer amid West Asia war: Maruti Suzuki's Bhargava

The GST 2.0 gave impetus not only to the automobile industry but to several sectors of the Indian economy, which continues to do well despite the impact of the West Asia war, Maruti Suzuki India Chairman RC Bhargava said, adding the tax reform provided the necessary buffer to navigate this uncertain period.

Addressing shareholders in the company's annual general meeting, Bhargava on Monday said Maruti Suzuki India expects the Indian "car industry will grow to 6.3 million by 2031, and that the share of the small car market will grow significantly faster" than it did in the previous five years, driven by the cuts in GST rates in September last year.


"The Indian economy continues to do well, and collections of GST remain higher than ever before. This is all despite the Iran problems, the West Asia war, and such issues. I do believe that without GST reforms, we may not have done so well in the difficult months that have elapsed," Bhargava said.

Recollecting the optimism he had expressed over the future of the auto industry in the aftermath of the GST reforms, the Chairman of India's car market leader said, "This happened. I'm happy to inform you that these reforms have given a new impetus not only to the automobile industry but to several sectors of the economy. National GDP growth figures have been better than forecast by most agencies."

Thanking Prime Minister Narendra Modi, Finance Minister Nirmala Sitharaman and 'all other members of the government' for the "historical reform step", Bhargava said, "The reform has shown what a big difference it can make to the economy, and I would urge state governments and the central government to proceed faster on the road to reform, continue to make doing business easier, use more technology, as it has been shown that it reduces corruption and delays."

Noting that time saving is a major factor in lowering costs of production, he asked the governments to trust the private sector and the power of competition.

"The faster wealth is created, faster government revenues will grow, and if the government programs continue as they are going, there will be much more equitable growth from the country," he noted.

Bhargava appealed to "all political parties, leaving nobody out" to "see the value of reforms which help to make development faster, which help to increase competitiveness of the Indian economy, and which bring about more employment generation because of larger economic activity".

"Please consider this as a national task, because the strength of India in all global matters will lie in its economic strength," he stated.

Bhargava noted that it has been witnessed "over the years that without creating wealth, we cannot proceed towards either a more prosperous society, an economically stronger India, or extend welfare measures which sustain".

On the outlook of the automotive industry, Bhargava said Maruti Suzuki India is in "the process of making an accurate estimate, as possible, of the likely growth of the car market in the next five years, a happy exercise necessitated by the GST reforms".

"This could lead to some changes in our long-term production and sales targets. Today, we are estimating that the car industry will grow to 6.1 million to 6.3 million by 2031, and that the share of the small car market will grow significantly faster than what had happened in the last five years," Bhargava noted.

He said the company continues to expand its production capacity to meet expected growth in demand. As a result of expansion projects currently being undertaken by the company, he said, "our installed capacity would reach 2.9 million units at the end of 2026-27, and 3.65 million units at the end of 2030-31. We are doing all this expansion because our economy has a huge potential for growth".

Maruti Suzuki India has commissioned two lines at its Kharkhoda plant in Haryana, and work is progressing on the third line.

"A fourth line of 2.5 lakh units capacity was commissioned in Hansalpur in Gujarat, raising total capacity to 1 million. This is Suzuki's largest plant anywhere in the world," Bhargava said.

Work has started at the new site at Sanand in Gujarat, and it is intended to install a total capacity of 1 million units there. The proposed investment in Sanand is about Rs 35,000 crore, he informed the shareholders.