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Budget 2020: Hero Cycles Urges Government To Reduce GST On Bicycles To 5% From Current 12%

The company has also sought extension of FAME-II benefits to electric bicycles, says company. 

A man rides a bicycle past a building under construction stands the site of The World Towers, a luxury residential project developed by Lodha Developers Ltd., left, in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)
A man rides a bicycle past a building under construction stands the site of The World Towers, a luxury residential project developed by Lodha Developers Ltd., left, in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Leading bicycle maker Hero Cycles Ltd. on Monday urged the government to reduce Goods and Services Tax on bicycles from 12 percent to 5 percent ahead of the Union Budget to revive demand in the rural markets.

The company has also sought extension of FAME-II benefits to electric bicycles.

"The budget must focus on reviving slumping demand across the country through a series of measures including re-adjusting GST slabs to put more disposable income into the hands of people," Hero Motors Company Chairman Pankaj M Munjal said in a statement.

The bicycles are largely used by low income group and rural populations and therefore need to be made cheaper by slashing GST from the current 12 percent to the lowest 5 percent slab, he added.

"Similarly, we also want the government to extend FAME-II benefits to electric bicycles," Munjal said.

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Lower GST on bicycles would provide relief to millions of low-income households, the company said.

"We hope the government recognises the need to promote electric bicycles as much as the need to promote electric cars. While electric cars address the problem of pollution, they do not address the concern of traffic congestion in Indian cities," Munjal said.

Electric bicycles are both eco-friendly and space friendly and also offer a viable solution to the problem of range anxiety that comes with lack of charging infrastructure as they can be easily pedaled back in case of battery loss, he added.

Extending the subsidy benefits of FAME-II to electric bicycles will help manufacturers offer more affordable products to consumers, Munjal noted.