Maruti Suzuki says high taxes levied by govt leads to low car ownership

Maruti Suzuki has said that the taxes levied by the government on vehicles has put them beyond the reach of much of the population. The carmaker's criticism of the government tax regime is similar to that of Tesla and Toyota Motor. Earlier in 2019 when Tesla was looking to enter India, the US EV startup's CEO Elon Musk had said that India’s duties prevented it importing electric cars to test demand before committing to build a local factory. Toyota, in 2015, halted expansion in India due to high tariffs.

While speaking at an event, Maruti's Chairman RC Bhargava said that the government policies are such that they treat cars as luxury products that need to be heavily taxed. He added that this has led to the car-industry's growth slowing to 3% from 12% in the past twelve years, partly due to poor government policies. The cheapest model from Maruti Suzuki costs ₹3,39,000. A goods and services tax of 28% applies to most new cars at present.

Per capita income in the country is about $2,300 a year, compared with $12,500 in China and $69,000 in the US, according to the World Bank. Only 7.5% of Indian households own a car in India, which is lower than in China, where almost half of urban homes and one quarter of rural households own a car.

Separately, speaking at the event, Maruti Chief Executive Officer Hisashi Takeuchi, said that the company has some gaps in its product portfolio and is working on strengthening the lineup. The carmaker sells cheaper entry-level cars in the market and is looking to introduce two new sports utility vehicles in January.

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