Over-regulation has made automobiles 'unduly expensive' in India: Rajiv Bajaj

Bajaj Auto's MD Rajiv Bajaj said that "overregulation" related to safety and emissions has made automobiles, especially entry-level two-wheelers, in India "unduly expensive" and called for a GST cut on entry-level motorcycles to make them more accessible in the Indian market. 

Speaking at the Pulsar NS400Z launch, Bajaj pointed out that BS6 and ABS regulations are the reasons for a "dramatic change" in price in the last few years. 

"Before BS VI and ABS became compulsory, Pulsar 150 was Rs 71,000. Today the same motorcycle is Rs 1.15 lakh. The government has made automobiles in India unduly expensive with higher taxation and very high regulatory norms. That has made them so expensive," said Rajiv Bajaj, Managing Director, Bajaj Auto. 

April 2019 onwards, the Government of India mandated that all two-wheelers with an engine capacity of 125cc or more should have an Anti-Lock Braking System (ABS). Starting the very next year on April 1, 2020, India leapfrogged to the Bharat Stage 6 (BS6) emission norms, replacing the previous BS4 norms.

Clarifying that he doesn't mean that BS6 is not good for the country, Bajaj said that there's a discrepancy in taxation in comparable markets. 

"Why is it that in India, for vehicles of the aam aadmi (common man) outside the metros, they have to pay a GST of 28 percent? But if you look at all the ASEAN countries, Latin America, Brazil, the typical equivalent of GST is around 8-14 percent. On one hand, we want regulation at the highest level in terms of emissions, on the other hand, GST is so high. The government should reconsider a GST of 18 percent and it should not be 28 percent," he said. 

"Then on the safety front which makes ABS compulsory on a 150cc motorcycle in India which generates 12-14 horsepower, it's overkill," he added. 

Bajaj added that there was a significant (price) discontinuity a few years ago, due to regulations related to safety and emissions. "There was kind of a dramatic change in price which owes itself to the regulation. I have openly called this over-regulation of the market," he adds. 

Referring to Marie-Antoinette (the queen of France during the French Revolution), he said," Are we going to tell our people to eat cake, too?" As the story goes, it was the queen’s response upon being told that her starving peasant subjects had no bread to eat, reflecting her poor understanding of their plight. 

Bajaj says that Rs 1 lakh is a lot of money for an average person. "We can mitigate this by lowering the running cost of the vehicle. That's why we have a two-pronged strategy of CNG for entry-level motorcycles and electric vehicles for scooters. From a consumer point of view, lower (price) is always better," he said. Bajaj is gearing up for the much-anticipated launch of its CNG-powered motorcycle on June 18. 

WITH INPUTS FROM PRERNA LIDHOO