Toyota Halts India Expansion, Blaming ’We Don’t Want You’ Taxes
Toyota Halts India Expansion, Blaming ’We Don’t Want You’ Taxes
Shekar Viswanathan, Vice Chairman of Toyota Kirloskar Motor says that the government keeps taxes on cars and motorbikes so high that companies find it hard to build scale.
Toyota Motor Corp. won’t expand further in India due to the country’s high tax regime, a blow for Prime Minister Narendra Modi, who’s trying to lure global companies to offset the deep economic malaise brought on by the coronavirus pandemic. The government keeps taxes on cars and motorbikes so high that companies find it hard to build scale, said Shekar Viswanathan, vice chairman of Toyota’s local unit, Toyota Kirloskar Motor. The high levies also put owning a car out of reach of many consumers, meaning factories are idled and jobs aren’t created, he said.
"The message we are getting, after we have come here and invested money, is that we don’t want you," Viswanathan said in an interview. In the absence of any reforms, "we won’t exit India, but we won’t scale up."
Toyota, one of the world’s biggest carmakers, began operating in India in 1997. Its local unit is owned 89% by the Japanese company and has a small market share -- just 2.6% in August versus almost 5% a year earlier, Federation of Automobile Dealers Associations data show.
In India, motor vehicles including cars, two-wheelers and sports utility vehicles (although not electric vehicles), attract taxes as high as 28%. On top of that there can be additional levies, ranging from 1% to as much as 22%, based on a car’s type, length or engine size. The tax on a four-meter long SUV with an engine capacity of more than 1500 cc works out to be as high as 50%.
Ford, GM Out
The additional levies are typically imposed on what are considered to be "luxury" goods. As well as cars, in India that can include cigarettes and sparkling water.
India is planning to offer incentives worth $23 billion to attract firms to set up manufacturing, people familiar with the matter said last week, including production-linked breaks for automakers. International automakers have struggled to expand in the world’s fourth-biggest car market.
General Motors Co. quit the country in 2017 while Ford Motor Co. agreed last year to move most of its assets in India into a joint venture with Mahindra & Mahindra Ltd. after struggling for more than two decades to win over buyers. That effectively ended independent operations in a country Ford had once said it wanted to be one of its top three markets by 2020.
Such punitive taxes discourage foreign investment, erode automakers’ margins and make the cost of launching new products "prohibitive," Viswanathan said.
"You’d think the auto sector is making drugs or liquor," he said. Toyota, 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 a second plant in India.
Taxes on electric vehicles, currently 5%, will probably also go up once sales increase, Viswanathan said, referring to what he says has become a pattern with successive governments in India.
While discussions are ongoing between ministries for a reduction in taxes, there may not any immediate agreement on an actual cut, India’s Heavy Industries Minister Prakash Javadekar said earlier this month.
A finance ministry spokesman didn’t immediately respond to messages seeking comment.
EV Challenge
Automobile sales in India were weathering a slump before the coronavirus pandemic, with at least half a million jobs lost. A lobby group has predicted it may take as many as four years for sales to return to levels seen before the slowdown.
The biggest players are the local units of Suzuki and Hyundai Motor Co., which have cornered the market for compact, affordable cars. Maruti Suzuki India Ltd. and Hyundai Motor India Ltd. have a combined share of almost 70%.
Toyota in India has largely pivoted toward hybrid vehicles, which attract taxes of as much as 43% because they aren’t purely electric.
But in a nation where few can even afford a car, let alone a more environmentally friendly one, EVs or their hybrid cousins have yet to gain much acceptance. Elon Musk, the billionaire founder of Tesla Inc., has saidimport duties would make his vehicles unaffordable in India.
"Market India always has to precede Factory India, and this is something the politicians and bureaucrats don’t understand," Viswanathan said. Modi’s much-touted Make in India is another program aimed at attracting foreign companies.
India needs to have demand for a product before asking firms to set up shop, yet "at the slightest sign of a product doing well, they slap it with a higher and higher tax rate," he said.
Please note that under 66A of the IT Act, sending offensive or menacing messages through electronic communication service and sending false messages to cheat, mislead or deceive people or to cause annoyance to them is punishable. It is obligatory on kemmannu.com to provide the IP address and other details of senders of such comments, to the authority concerned upon request. Hence, sending offensive comments using kemmannu.com will be purely at your own risk, and in no way will Kemmannu.com be held responsible.
Similarly, Kemmannu.com reserves the right to edit / block / delete the messages without notice any content received from readers.
Final Journey of John Henry Almeida (71 years) | LIVE from Udyavara

Final Journey of Mrs. Severine Pais (85 years) | LIVE from Milagres, Kallianpur, Udupi

Final Journey of Mrs Lennie Saldanha (89 years) | LIVE from Kemmannu | Udupi

Final Journey of Zita Lewis (77 years) | LIVE from Kallianpur, Udupi

Final Journey of Henry Andrade (83 years) | LIVE from Kemmannu

Final Journey of Mr. Leo Britto (65 years) | LIVE from Mother of Sorrows Church, Udupi

Mount Rosary Church - Rozaricho Gaanch May 2025 Issue

Final Journey of Juliana Machado (93 years) | LIVE from Udyavara | Udupi

Final Journey of Charles Pereira (78 years) | LIVE from Kemmannu

Milarchi Laram, Milagres Cathedral, Kallianpur, Diocese of Udupi, Bulletin - April 2025

Holy Saturday | St. Theresa Church, Kemmannu

Final Journey of Albert Lewis (85years) | LIVE From St Theresa’s Church Kemmannu | Udupi

Final Journey of Bernard G D’Souza | LIVE from Moodubelle

Earth Angels Kemmannu Unite: Supporting Asha Fernandes on Women’s Day

Final Journey of Joseph Peter Fernandes (64 years) | LIVE From Milagres, Kallianpur, Udupi

Milagres Cathedral, Kallianpur, Udupi - Parish Bulletin - January 2025 Issue

Rozaricho Gaanch 2024 December Issue - Mount Rosary Church, Santhekatte

Land/Houses for Sale in Kaup, Manipal, Kallianpur, Santhekatte, Uppor, Nejar, Kemmannu, Malpe, Ambalpady.

Naturya - Taste of Namma Udupi - Order NOW

Focus Studio, Near Hotel Kidiyoor, Udupi


Earth Angels - Kemmannu Since 2023

Click here for Kemmannu Knn Facebook Link
Sponsored Albums
Exclusive
Milagres Cathedral celebrates Sacerdotal Ruby Jubilee of Mngr Ferdinand Gonsalves and Parish Community Day with grandeur

Mangalorean Teen Feryl Rodrigues Shines as May Queen 1st Runner-Up at Indian Club Bahrain [Video]

A Saintly Shepherd of Our Times: A Tribute to Pope Francis

Servant of God – Fr Alfred Roche, Barkur -Closing ceremony of Birth Centenary Celebrations.

"Raav Sadanch" – A Konkani Musical Masterpiece by Young Prodigy Renish Tyson Pinto, Barkur Inspires Youth to Chase Their Passions.

Bishop Rt. Rev. Dr. Gerald Isaac Lobo, Offers the Solemn Thanksgiving Jubilee Mass, in Milagres Cathedral

GOLDEN YEARS, HAPPIER TOGETHER….by P. Archibald Furtado

Parish Level inaugural Badminton Little Flower Cup 2024 held in Kemmannu.

Udupi: Foundation stone laid for the SVP sponsored new house at Kemmannu
