Automakers, retailers lure customers with discounts as GST kicks in

MUMBAI (Reuters) – Some of India’s biggest automakers and retailers announced price cuts on Saturday as Asia’s third-largest economy switched to a new nationwide sales tax at the stroke of midnight, replacing a host of provincial and national levies.

The Goods and Services Tax (GST), India’s biggest tax reform in the 70 years since independence from British colonial rule, unifies the $ 2 trillion economy and 1.3 billion people into one of the world’s biggest common markets.

Maruti Suzuki Ltd (MRTI.NS), India’s biggest carmaker by sales, dropped prices on some models by up to 3 percent, passing the “entire benefit of GST rates” to customers.

Maruti, however, said prices of two mild hybrid models had increased under the GST regime, following withdrawal of tax concessions.

Tata Motors’ luxury British arm, Jaguar Land Rover (JLR), has reduced prices for all cars manufactured in India by up to 7 percent, a spokeswoman for the company told Reuters.

Hypermarket Big Bazaar, owned by Future Retail Ltd (FRTL.NS), announced discounts of 2 percent to 22 percent on groceries and household supplies across its stores in 26 states.

Fashion portal Myntra, part of India’s biggest online retailer Flipkart, was also offering GST discounts.

In Bhubaneswar, the capital of eastern Odisha state, customers queued up outside shops and malls, which remained open till late Friday night to clear stocks of watches, electronic gadgets, cosmetics and gold at discounted rates before the GST regime kicked off at midnight.

Members of Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) were seen celebrating the launch of the GST with firecrackers on Friday evening and by painting “Welcome GST” slogans on roads.

The federal government is encouraging all business to migrate to the new GST system but its complexity – four rates and several exemptions – has still kept many at bay.

“We will continue as usual unless we see trouble,” said a 35-year-old grocer in Bhubaneswar who has not yet registered for the GST.

India’s northern Muslim-majority state of Jammu and Kashmir is yet to implement the GST as the provincial government grapples to arrive at a consensus with the opposition and other stakeholders.

Traders in Kashmir Valley have called for a day’s strike on Saturday to protest the GST.

“Though we have missed the (July 1) deadline, we will wish to take everybody along before taking any decision,” Public Works Minister Naeem Akhtar said.

Reporting by Jatindra Dash in Bhubaneshwar, Fayaz Bukhari in Srinagar; Additional reporting and writing by Sankalp Phartiyal; Editing by Stephen Coates