Indian taxes keep Toyota focused on plant utilisation not expansion

Toyota Motor Corp said on Tuesday it will focus on fully utilising production capacity at its plants in India, after a report that it would halt expansion due to high taxes.

Taxes on cars sold in India are as high as 28% and after additional levies can rise to up to 50% for some models.

"The message we are getting, after we have come here and invested money, is that we don't want you," Bloomberg quoted Shekhar Viswanathan, vice chairman of Toyota Kirloskar Motors, as saying on Tuesday.

"We won't exit India, but we won't scale up," Viswanathan said, in the absence of any reforms.

Toyota Kirloskar Motors said in a statement it is committed to the Indian market after Viswanathan also said punitive taxes discourage foreign investment, erode automakers' margins and make the cost of launching new products "prohibitive".

The Society of Indian Automobile Manufacturers (SIAM) has urged the government to cut the tax on cars, motorbikes and buses to 18% to help boost sales that have been hit further during the coronavirus pandemic.

India's minister for heavy industries Prakash Javadekar said on Twitter that the automaker's chairman Vikram Kirloskar has said that Toyota will invest more than 20 billion rupees ($272 million) in India over the next 12 months.

Toyota has capacity to produce more than 400,000 vehicles a year at two plants in the southern Indian state of Karnataka, but data shows it made just over 100,000 cars last fiscal year.

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