The rise of India’s two-wheeler segment as well as the allied helmet industry has been a growth story in itself. The increase in the purchasing power of urban and semi-urban markets and, to top it off, the low cost of ownership of two-wheelers have been the main growth drivers for these segments.
Two-wheelers are also considered income generators. As the second most populous country in the world, India comprises many middle and lower class segments. With transportation still being a challenge in India, many people in these segments are turning to two-wheelers. This industry includes various vehicles like motorcycles, scooters, and mopeds, which come in a diverse range from affordable bikes to fancy bikes.
Additionally, with COVID-19 and social distancing becoming a new norm, people have reverted to their personal mode of transportation rather than using public transportation.
So, with two-wheelers also being the most convenient way to ride in India, this has also led to an increase in sales and demand for helmets.
With so many two-wheelers circulating on Indian roads in Tier I, II and III cities, this also indicates the necessary safety measures and precautions for cyclists. On average, there are 500,000 road accidents on Indian roads killed annually and more than 30% involve two-wheeler drivers.
With such an alarming number of road accidents, helmets are important for road safety. They are lifesaving devices and a product of necessity, whether riding or sitting on your back. This has even led to increased emphasis on helmet legislation by many state governments in India.
But it also makes sense for the government to think about cyclists who need quality helmets at reasonable prices to ride and stay safe.
Unless helmets are exempt from taxes, prices will skyrocket and the intent and efforts of governments to help drive the adoption of quality helmets will be lost.
Also, in a price sensitive country where people view helmets as a financial burden, a GST of 12% instead of 18% will help attract people to good quality helmets and encourage them to buy and understand its importance.
Every day, about 13 people lose their lives in road accidents. Many of these deaths occur because of the absence or poor quality of helmets. So for the sake of our country lower GST rates will be levied on helmets as they are for safety and we have seen many incidents where a helmet has saved a family from orphanage. Helmets are lifesaving devices, just like medicine. Therefore, just as there is no GST on drugs, helmets will be exempt.
Since helmets are directly associated with safety, it is of the utmost importance that this issue is given prominence at the earliest. Helmets should not be compared to other products. The purpose they serve is far superior to other things and should not fall under any GST policy, as helmets are products that have been negatively affected.
It’s not just about keeping the helmet industry from sinking, but also about keeping people safe without burning a hole in their pocket.
Additionally, the GST reduction on helmets will push the quality helmet sales chart to a new high; this will further help weed out the unorganized market, as the manufacture of fake helmets has already been criminalized.
Consequently, the GST rate on the same should be reduced to 12% instead of 18%.
The benefits will be considerable. It will eventually contribute to reducing road safety expenditures spent by the Government to 1.5% of the budget which is currently around 3% including ambulances, insurance, police, traffic police, hospitals and the doctors. It will certainly be a huge saving for the government.
*by Rajeev Kapur, Managing Director, Steelbird Helmets
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