India, Sept. 2 -- The Indian government is planning to reduce the GST rate on passenger vehicles from the current 28% to a lower slab, possibly to 18%, in an attempt to simplify the tax structure and boost consumer demand, which would eventually help the economy by increasing consumption. With this move, the small cars, which have traditionally been the backbone of the Indian passenger vehicle market but lately witnessed sluggish growth and a shrinking market share, are expected to see a route to revival.

During his speech on August 15, Prime Minister Narendra Modi announced that the government is working on a restructured GST regime, which is now being dubbed as GST 2.0. Under this regime, the government is planning to simplify the tax ...