He expects sustainable double-digit growth over the next five to ten years, rather than a “hockey-stick” jump, as India’s economy continues to expand.Luxury carmaker Mercedes-Benz India expects this year’s festive season to be its “best-ever” following the recent rationalisation of Goods and Services Tax (GST), but has called for a cap on road taxes levied by states to ensure long-term affordability and growth of the industry.
“The reduction in GST, which has a clear impact on price by 6–8 per cent, would definitely have an impact on demand in the short run,” Mercedes-Benz India MD and CEO Santosh Iyer told PTI. “This festive season should be the best-ever.”
However, he cautioned that without uniformity in state road taxes, the benefits of GST cuts may not fully reach customers. “At some point, even the road taxes across states need to be uniform and capped at certain levels, else the GST benefit will never reach the end-consumer,” he said, noting that levies currently range from 15 to 22 per cent.
GST 2.0 impact
Effective September 22, 2025, luxury cars and large vehicles (over 1,500cc or four metres in length) are taxed at a flat 40 per cent GST, with the additional compensation cess removed. While the headline GST rate is higher than the earlier 28 per cent, the removal of cess has brought down overall tax incidence, making models more affordable. “We are quite happy to note that there is consistency in policy, as the 5 per cent GST has continued on battery electric vehicles,” Iyer added.
Industry growth and economic link
Iyer underlined the correlation between luxury car sales and economic growth. “In the last six years, we have sold one lakh cars in India, and in the total 31 years, we have sold two lakh. The majority have come in the last six to seven years,” he said, pointing to rising per capita income.
He expects sustainable double-digit growth over the next five to ten years, rather than a “hockey-stick” jump, as India’s economy continues to expand.
Mercedes-Benz has invested over ₹3,000 crore in India and produces multiple models at its Pune plant. “We have sufficient production capacity to take care of the current requirement as well as the next couple of years,” Iyer said. Globally, the German carmaker is rolling out its biggest-ever product offensive, with new models also planned for India.
FTA support
On trade policy, Iyer backed the proposed India–EU free trade agreement (FTA), calling it the “next step” after GST reform. “Such measures drive economic development and facilitate two-way trade. More than 90 per cent of the cars we sell in India are locally produced, so the FTA would mainly impact the 10 per cent that are imported,” he said.
Mercedes-Benz Group board member Mathias Geisen earlier said India remains a “priority market” where investment plans will continue irrespective of FTA outcomes.
