Toyota Motor Won’t Expand Further In India Due To The Countries High Tax Regime
Toyota Motor Corporation says it will no longer expand in India. Toyota blamed more tax for this. The move of the company has shocked Prime Minister Narendra Modi’s efforts to woo foreign investors. PM Modi is engaged in wooing foreign investors to recover from the shock caused by the Corona epidemic.
Difficult to increase production due to higher tax
Shekhar Viswanathan, vice chairman of Toyota Kirloskar Motor, the Indian unit of Toyota, says the government has imposed more tax on cars and motorbikes. This is making it difficult to increase production of vehicles. Cars are getting out of reach of consumers due to higher tax. This means that factories are lying idle and jobs are not being created.
We won’t leave india
Vishwanathan said that after coming here and investing, we got the message that we do not want you. He said that even if there is no improvement, we will not leave India. But we will not be able to increase production. Toyota, the world’s largest carmaker, started operations in India in 1997. The Japanese company owns 89 percent stake in Toyota’s Indian unit. According to data from the Federation of Automobile Dealers Association, Toyota had a 2.6 percent share in the domestic vehicle market in August. Toyota had a 5 percent share in the same period a year earlier.
Many auto companies left India
The General Motors Company left the country in 2017. Last year, Ford Motor Company announced a joint venture with Mahindra & Mahindra after winning the hearts of Indian consumers for two decades. Viswanathan says that such punitive tax discourages foreign investment. Also, there is an impact on the margins of auto makers and the launch of new products.
28 percent tax on motor vehicle in India
In India, motor vehicles such as cars, two-wheelers, sports utility vehicles (excluding electric vehicles) are taxed at 28 per cent. In addition, vehicles levied from 1 to 22 percent. This levy depends on the type, length and engine capacity of the car. A four meter long SUV with an engine capacity of more than 1500 cc attracts 50% tax. In general, additional levy is levied on luxury goods. Cars, cigarettes and sparkling water are considered luxury goods in India. However, there is a 5% tax on electric vehicles.
Government plans to give $ 23 billion incentive
The central government is planning to give $ 23 billion incentive to woo manufacturing companies. This production will be linked incentive and auto makers will also get the benefit. International car makers are struggling to expand into the world’s fourth largest car market.