The Indian automotive industry is on the rise, and is witnessing a huge growth in sales as compared to the pre-Covid era. However, the government in its budget has not given any special benefit to the industry except tax exemption on electric vehicles. Speaking on the note with PTI, Toyota Kirloskar Motor Vice Chairman Vikram Kirloskar said that the country needs a change in tax norms for the automobile industry. “While India may not drastically reduce the tax rate on automobiles at this point of time, a plan to reduce the cess on the industry may be considered considering the sector’s contribution to the country’s overall GDP,” he said. .
“The auto industry is highly taxed. If we look at a car from the time it is produced and the time it is sold, in most cases it is 30 to 50 percent higher than the ex-factory prices (after adding GST and all). The percentage is higher. Other taxes including road tax,” he told PTI in an interview.
He continued, “We are very competitive as an industry. I think in the world, cost-wise, quality-wise, we have become very competitive. Planning to do would really benefit.” industry.”
Over a 10-year period, he added, “Can you cut it in half? … Is it possible to make a long-term plan of how to reduce taxation in the auto industry enough to make it big enough?” , which will make it even more competitive domestically and for exports and provide large scale employment and benefit the economy?”
Currently, 28 per cent GST is levied on automobiles, with an additional cess ranging from 1 per cent to 22 per cent depending on the type of vehicle. Cars imported as completely built units (CBUs) attract customs duty of between 60 per cent and 100 per cent depending on engine size and cost, insurance and freight (CIF) value of less than or more than USD 40,000 .
Kirloskar asserted that such a move to gradually reduce taxes would also benefit the country in terms of boosting employment and economic growth.
The car industry is a huge source of job creation – from steel making to cast iron making, raw materials and all the way to dealerships, he said, adding, “It is a huge part of the economy, 7-8 per cent of GDP.”
However, he admitted that a drastic cut in taxes on automobiles is not possible at the moment.
“We as a country cannot afford… I never asked for GST cut. I am just saying because long term planning is possible and how to reduce taxation in auto industry is very important. Make it bigger, which will make it even more competitive domestically and for exports and provide large scale employment and benefit the economy?” Kirloskar added.
On the demand of a section of the auto industry to reduce customs duty on imported electric vehicles to promote electrification of automobiles in India, he said, “Why can’t you make it here?”
Kirloskar said companies need to develop supply chains in India to increase localization.
With inputs from PTI