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Toyota Kirloskar Plans to Halt Expansion in India Due to High Taxes, a Blow to 'Atmanirbhar Bharat' - Report

Image for Representation
(Picture Source: Reuters)

Image for Representation (Picture Source: Reuters)

Toyota’s Vice Chairman Shekhar Viswanathan stated that the government’s high taxes on cars and motorcycles makes it difficult to build scale.

In what could be a blow to Prime Minister Narendra Modi’s plans of trying to lure global companies to compensate massive setbacks occurred during the pandemic-induced lockdown, Japanese manufacturer Toyota has confirmed that it has halted all plans of expansion in India.

Speaking to Bloomberg, Toyota’s Vice Chairman Shekhar Viswanathan stated that the government’s high taxes on cars and motorcycles makes it difficult to build scale. The high taxes also keeps owning a car out of reach for many consumers across the country.

Toyota ranks among the auto giants in the country and has been operating in the market since 1997. The company’s local unit, Toyota Kirloskar is owned 89 percent by the Japanese company. Its market share is currently just 2.6 percent in August which was down from 5 percent, a year earlier, FADA Data shows.

Manufacturers find it difficult to function in the Indian market as motor vehicles including cars, two-wheelers and SUVs attract taxes as high as 28 percent. In addition to this, there can be additional levies ranging from 1 to 22 percent depending on the car’s type, length or engine size.

Such punitive taxes discourage foreign investment, erode automakers’ margins and make the cost of launching new products “prohibitive,” Viswanathan said.

The Japanese automaker, which also has an alliance with Suzuki Motor Corp. to sell some of Suzuki’s compact cars under its own brand, is currently utilizing just about 20% of its capacity in the second plant in India.

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