India, Sept. 4 -- The government has come through on a longstanding demand of India's automotive industry, that of a GST rate cut on cars to increase adoption of personal mobility in the country. After all, while India is the third-largest car market in the world, adoption is abysmally low at 32-34 cars per 1,000 people.

That should change now.

The 56th GST Council has reduced the tax on small cars to 18% from 28% earlier. Bigger cars, including SUVs are in a new 40% slab-without any additional cess, that reduces the final tax incidence. Electric cars will continue to attract 5% GST. All auto components-irrespective of the vehicle type they go into-are also rated at 18%.

"This decision (GST rate cut on cars) will not only make vehicles...