'Message we're getting, we don't want you': Toyota stops India expansion, blames high taxes

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Toyota Kirloskar Motor has decided to halt expansion blaming the high taxes levied on automobiles in the country.

At a time when Prime Minister Narendra Modi is trying to bring in global countries to scale production in India, the Vice Chairman of Toyota has said that due to the high taxes on cars and motorcycles, ownership becomes a problem for customers thereby making it difficult for companies to scale up.

In an interview with Bloomberg, Vice Chairman, Shekar Viswanathan said, “The message we are getting, after we have come here and invested money, is that we don’t want you.”

Vishwanathan also made it clear that if reforms are not made to the current situation, Toyota may not exit India, but they do not plan to expand either.

According to Federation of Automobile Dealers Associations (FADA), Toyota, operational in India since 1997 has a relatively small market share which has also decreased from 5 percent last year to 2.6 percent in August, this year.

According to report, taxes on the SUVs and two-wheelers attracts taxes as high 28 percent not including the taxes depending on vehicle type, which by itself range from 1 percent to 22 percent.

Vishwanathan says that such a tax structure makes it “prohibitive” to launch new products as foreign investment becomes more difficult while the automakers’ margins also suffer.

“You’d think the auto sector is making drugs or liquor,” he said.