Small cars in India face highest regulatory burden: Maruti Suzuki chairman

Maruti Suzuki chairman RC Bhargava indicated that demands for small cars in India have declined significantly in recent times because of the high tax
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R.C. Bhargava, chairman of Maruti Suzuki India Ltd. (Bloomberg)
R.C. Bhargava, chairman of Maruti Suzuki India Ltd.

Maruti Suzuki India chairman RC Bhargava said that small cars in India face the highest regulatory burden, even though this segment is one of the most important categories of the Indian automobile industry. He also believes that consumers are not buying small cars in the country as before due to the high tax burden on these models. The Maruti Suzuki chairman said that demand for small cars has slowed down recently and even declined, owing to the increased cost of these models due to several regulatory changes and government taxes. In his opinion, the regulatory pressure on small cars in India is even higher than the big passenger cars, reports PTI.

Interestingly, Maruti Suzuki has the largest share in the small car segment in the Indian auto market. It sells entry-level cars like the Alto, Alto K10 and S-Presso in the country. Bhargava reportedly said that having a uniform tax structure across all segments of vehicles will not augur well for the growth of the Indian auto industry.

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The Maruti Suzuki chairman further stated that all taxation on the automobile industry should be rationalised, just like the taxation structure is in the rest of the world. "The burden of regulatory changes on the small cars is far higher than the regulatory burden on big cars, and that is changing the whole market behaviour. People who are buying small cars are not buying small cars in near the same numbers. Personally, I think it's not a good thing, either for the car industry or the country," Bhargava stated.

Automobiles in India are currently taxed at 28 per cent GST with additional cess ranging from one to 22 per cent depending on the type of vehicle. Cars imported to the country as Completely Built Units (CBU) are slapped with customs duty ranging between 60 per cent and 100 per cent, depending on engine size and cost, insurance and freight (CIF) value being less or above $40,000. Electric cars, be they small or big, attract a five per cent GST under the new tax regime. Citing this example, Bhargava said that this is where the uniform taxation is happening for automobiles in India, as there are no different tax rates for small and big electric vehicles.

First Published Date: 21 Dec 2022, 13:15 PM IST
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