Highlight
- Toyota Halts Expansion In India
- Products like Cars, cigarettes and sparkling water comes under the luxury category in India. Due to this, luxury goods are taxed and their prices go up.
- Cars, Two-wheelers, SUVs in India attract 28 percent tax.
Why Toyota Halts Expansion In India?
Overview
Toyota Motor Corporation has said that it will no longer expand its business here due to India’s high tax regime.
This move of the company can be considered a setback for Prime Minister Narendra Modi, who is constantly trying to woo global companies to India to compensate for the derailed economy.
Government Will Give Incentive
As per reports, experts said that the government is planning to give incentives of $ 23 billion to attract companies to set up manufacturing plants.
India is the fourth largest car market in the world, But automobile companies have been constantly facing difficulties to expand their business.
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Resentment over tax
Shekhar Viswanathan, vice chairman of Toyota’s Indian unit, said that the government has imposed more tax on cars and motorcycles, which has made it difficult for companies to expand their business.
He said, due to higher taxes, vehicles are being out of the reach of consumers. It also means that there will be no work in factories and jobs will not be created.
Toyota Will leave India ?
Vishwanathan said in an interview on the issue of higher taxes and business, “After coming here and investing, we got the message that we don’t want you.”
Due to a lack of tax reforms, we will not completely exit the Indian market, but we are not going to increase our production further moreover, Toyota ranks among the world’s largest automobile companies.
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Reduced Sales in India
Toyota started business in India in 1997 and the Japanese company holds an 89% stake in Toyota’s Indian unit.
According to data from the Federation of Automobile Dealers Association (FADA), Toyota’s share of the domestic vehicle market fell to 2.6 percent in August 2020 from 5 percent in the same period a year ago.
Luxury Tax On Vehicles
Products like Cars, Cigarettes, and Sparkling water come under the luxury category in India. Due to which luxury goods tax is levied and its prices increase.
Cars, two-wheelers, SUVs in India attract 28 percent tax. Apart from this, the luxury goods tax of 1 to 22 percent is levied on these vehicles.
This tax is based on the type, length, and engine capacity of the car. A 4-meter long SUV with an engine capacity of over 1500 cc attracts a 50 percent tax.
Currently, electric vehicles have a small concession and are taxed at 5 percent.
Ford and GM also out
General Motors Company exited the Indian market in 2017.
Ford Motor has also decided to move most of its assets out of India last year.
Ford Motor Company did not succeed in attracting customers even after working independently in India for two decades.
Though, last year, they announced a joint venture with Mahindra & Mahindra.
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