• Maruti Suzuki India chairman RC Bhargava said people who were buying small cars are not buying anywhere near the same numbers as before
Maruti Suzuki India Chairman RC Bhargava has said that a uniform tax structure across all segments of vehicles will not be good for the growth of the auto industry. He also said that the regulatory burden is highest on small cars, which are a major segment of the Indian automobile industry.
At an event, the Maruti chairman said that the demand for small cars has slowed down in recent times and even declined as several regulatory changes and government taxes have increased the cost of such models.
Bhargava further said that people who were buying small cars are not buying anywhere in the same numbers as before.
The country's largest carmaker sells entry-level cars like Alto, Alto K10 and S-Presso.
“The burden of regulatory changes on small cars is far greater than the regulatory burden on large cars and it is changing the behavior of the entire market. People who are buying small cars are not buying small cars in equal numbers. Individually , I think it is not a good thing for the car industry or the country," Bhargava said.
The Maruti chairman was replying to a question on his views on having a uniform tax rate across all segments of automobiles.
According to Bhargava, all taxation on the motor industry should be rationalised. It should be treated like the rest of the world.
'The rate of economic growth can be higher if...'
Maruti's chairman said that if there is rapid development in the manufacturing sector, then India's economic growth rate can be high. However, he added that despite the best efforts of the PM Modi-led government at the Centre, implementation at the ground level remains 'unfortunately' due to gaps.
For the healthy growth of the automobile sector, there should be a steady increase in the number of new customers. The ownership base of cars should increase every year. Bhargava said, only when the whole pyramid becomes one big one, it is able to balance itself.
"I don't think there has become an inverted pyramid and the car industry has become an industry where there is hardly any growth in the small segment in India and all the growth is in the higher segments. So, that factor should be kept in place. " Keeping in mind, the regulatory impact on the car, and this is an argument for not having a uniform rate of tax on all small and large cars," he asserted.
to tax
Automobiles currently attract 28% GST with an additional cess ranging from 1-22% depending on the type of vehicle. Cars imported as completely built units (CBUs) face customs duties of between 60% and 100% depending on engine size and the cost, insurance and freight (CIF) value is less than or more than $40,000.
Bhargava, however, said for electric cars, the GST has been kept at 5% "whether it is a small electric car or a big electric car. There is no differential tax rate. So, equal taxation is already happening".
He also expressed grief over the fact that heavy taxes are being imposed on the auto sector, which in a way has affected the growth of the industry.
"Throughout our history," he said, all motor vehicles "have been in the highest tax brackets".
Responding to a query on the impact of the clarification on the definition of SUV for taxation purposes, he said, "It confirms that they should charge 22% (cess) if four conditions are met, which would put it in the 50% tax bracket." Is. ".
Bhargava said, "You cannot develop an automobile industry with 50% taxation. Industries like automobiles in the world have developed with 50% taxation, but this is the wisdom of policy makers and political leadership."
He said that compared to developed markets like Europe and Japan, where per capita income is much higher, taxes on cars in India are very high.
"Now, one needs to think about, should cars be taxed at a higher than average rate of taxation...? If so, then we are in some way conceding that cars or luxury Products should be taxed more than they are taxed." Non-luxury products, which is the old socialist way of thinking and taxation," he said.
On the overall growth of the economy, he said India is doing well with a "growth rate of around 7%", though it looks difficult to achieve that rate next year "because there are a lot of international events, which are in a negative sense". . is unfavorable to us or to the rest of the world".
"The growth rate could be higher if manufacturing in India could grow faster. Unfortunately, manufacturing in India is still lagging behind. Mr. Modi has put a lot of emphasis on a lot of reforms and changes have happened but for some reason, we We are not able to make the kind of progress that we should be making, something that we need to see," he said.
Bhargava said that one of the main reasons for this
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