India, Aug. 31 -- A potential GST rate cut on cars could stimulate demand in the mass-market segment but demand for luxury cars is still likely to remain muted, according to an analyst.

According to Jitin Makkar, senior vice president and group head (corporate ratings) at ICRA Ltd., luxury car sales are likely to grow in the mid-single digits as 50% US tariffs on India are likely to dampen sentiment.

Between FY22 and FY25, growth in India's luxury car sales outpaced that of the broader passenger market, driven by strong aspirational demand across diverse demographics, including younger and first-time buyers.

"However, this trend is poised to reverse in FY26. A potential GST rate cut on smaller cars could stimulate demand in the mass-ma...