1. Policy Timeline
1.1 2006 — Govt introduced excise duty cut for cars ≤ 4m (petrol ≤ 1.2L, diesel ≤ 1.5L). Duty: 12% vs. 24–27% on bigger cars.
1.2 Pre-GST (till 2017) — 12% excise + VAT/state levies, but still cheaper than >4m cars.
1.3 GST rollout (2017) — Sub-4m cars taxed 28% GST + 1% (petrol) or 3% (diesel) cess → ~29–31%.
1.4 GST Reform (2025) — Flat 18% GST on small cars, no cess. SUVs & >4m cars in 40% slab.
1.5 Impact — Sub-4m car prices dropped ~5–8% post-2025 GST change.
2. Why the Government Promotes Sub-4-Meter Cars
2.1 Affordability — Lower tax → cheaper cars for middle-class buyers.
2.2 Urban suitability — Easier to drive & park in congested Indian cities.
2.3 Industrial push — Boosted domestic manufacturing & localisation.
2.4 Employment & ownership growth — Created mass-market car ownership wave.
2.5 Fuel economy & emissions — Smaller engines = lower consumption (per km).
3. Benefits vs Longer Cars / SUVs
3.1 Advantages
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Lower price & tax
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Higher fuel efficiency
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Easier parking & turning radius
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Lower insurance premium
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Mass-market resale value
3.2 Disadvantages
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Smaller boot & cabin space
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Less powerful engines
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Lower aspirational appeal vs SUVs
3.3 Comparison Table
| Feature | Sub-4m Cars | Longer Cars / SUVs |
|---|---|---|
| Price | Lower (₹4–10 lakh avg) | Higher (₹10–25 lakh+) |
| Tax (2025) | 18% GST | 40% GST slab |
| Fuel economy | Better | Lower |
| Cabin/boot | Compact | Spacious |
| Safety | Varies, often lower | Usually stronger |
| Urban ease | High | Lower |
| Market trend (2020–25) | Declining share | SUV share rising |
4. Where Else Does Sub-4-Meter Category Exist?
4.1 Japan — Kei cars (≤3.4m, ≤660cc) with tax/insurance benefits.
4.2 Europe/US/China — Small car segments exist (B-segment), but no length-based tax slab.
4.3 Brazil/LatAm — Incentives based on fuel/engine, not car length.
4.4 Conclusion — India’s sub-4m slab is unique globally, except for Japan’s kei system.
5. Manufacturing Numbers Since 2006
5.1 Estimate — Between 4.5–6 crore units (45–60 million) sub-4m cars made since 2006.
5.2 Method — Based on SIAM totals × ~73% sub-4m share over years.
6. Top Sub-4-Meter Car Makers (Last 5 Years, Till Aug 31, 2025)
| Maker | FY20 | FY21 | FY22 | FY23 | FY24 | FY25* (till Aug) | Sub-4m share est. |
|---|---|---|---|---|---|---|---|
| Maruti Suzuki | 13.6L | 11.6L | 13.1L | 15.7L | 16.2L | 6.8L | 70–85% |
| Hyundai | 5.1L | 4.5L | 5.2L | 5.5L | 6.0L | 2.4L | 50–65% |
| Tata Motors | 2.8L | 2.3L | 3.0L | 4.0L | 4.4L | 1.9L | 45–60% |
| Mahindra | 2.0L | 1.8L | 2.2L | 2.7L | 3.0L | 1.3L | 35–50% |
| Kia | 1.5L | 1.6L | 2.2L | 2.5L | 2.9L | 1.2L | 45–60% |
(*FY = Apr–Mar, FY25 till Aug = 5 months data; L = lakh units. Source: SIAM + OEM releases, est. sub-4m share by model mix.)
7. Sub-4m vs Over-4m Business Value (Last 5 Years)
| Year | Sub-4m Volume (L units) | Sub-4m Business (₹ Cr, est.) | >4m Volume (L units) | >4m Business (₹ Cr, est.) |
|---|---|---|---|---|
| FY20 | 22L | ~₹1,20,000 | 8L | ~₹90,000 |
| FY21 | 19L | ~₹1,00,000 | 7L | ~₹80,000 |
| FY22 | 23L | ~₹1,35,000 | 9L | ~₹1,05,000 |
| FY23 | 27L | ~₹1,60,000 | 12L | ~₹1,40,000 |
| FY24 | 29L | ~₹1,85,000 | 14L | ~₹1,70,000 |
(Estimates assume avg ex-showroom: Sub-4m ~₹5.5 lakh, >4m ~₹12 lakh.)
8. India vs Top Car-Selling Nations (Production Volumes, Cars Only)
| Country | 2021 | 2022 | 2023 | 2024 | 2025 (till Aug) | Special Notes |
|---|---|---|---|---|---|---|
| China | 21M | 23M | 24M | 25M | 16M | Largest producer |
| USA | 6.9M | 7.1M | 7.5M | 7.8M | 5.0M | Pickup/SUV heavy |
| Japan | 6.6M | 7.0M | 7.2M | 7.4M | 4.9M | Kei cars exist |
| Germany | 3.1M | 3.4M | 3.6M | 3.8M | 2.4M | Premium/export heavy |
| India | 3.6M | 4.0M | 4.4M | 4.7M | 3.2M | Sub-4m unique |
(Source: OICA, SIAM, industry reports. M = million units.)
9. Final Recap
9.1 Policy began 2006 → massive growth of India’s small-car ecosystem.
9.2 GST 2025 cut tax on small cars to 18% → renewed boost.
9.3 Sub-4m cars = India’s global uniqueness (except Japan).
9.4 Still dominate volumes, though SUV demand is rising.
9.5 India now 4th largest car producer, with sub-4m as a key differentiator.
10. Disclaimer
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Data compiled from SIAM, OICA, OEM reports, The Economic Times, India Today, Reuters, Team-BHP.
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Sub-4m production/revenue estimates use model mix assumptions; official reports do not publish direct “sub-4m” numbers.
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Figures are indicative; consult SIAM/OEM disclosures for investment/financial decisions.
