Toyota won't scale up India operations due to high taxes

Cornelia Mascio
Settembre 16, 2020

Japanese vehicle manufacturer, Toyota Kirloskar Motor has briefly pulled brakes on its expansion plans in India citing government's high tax regime in the country.

In an interview to Bloomberg, TKM Vice-Chairman and whole-time director Shekar Viswanathan had said the company would stop expanding in India ruling out future investments as the government keeps taxes on cars and motorbikes so high that companies find it hard to build scale.

The Centre on Tuesday rebutted reports that Toyota Motor Corporation will stop investing in India.

"While discussions are ongoing between ministries for a reduction in taxes, there may not any immediate agreement on an actual cut, " India's Heavy Industries Minister Prakash Javadekar said earlier this month.

Endorsing the minister's remark, Kirloskar tweeted: "Absolutely! We are committed to the future of India and will continue to put all effort in society, environment, skilling and technology".

Kirloskar also added that the company is seeing the demand increase and the market would recover slowly.

Toyota, one of the world's biggest carmakers, began operating in India in 1997. Its local unit is owned 89% by the Japanese company. "Our first step is to ensure full capacity utilization of what we have created and this will take time", the statement read. "We won't exit India, but we won't scale up", Shekhar Viswanathan, Vice Chairman, Toyota Kirloskar Motor said.

In a statement, Toyota Kirloskar said it would continue to be committed to India and needs to protect jobs, but added that utilising the capacity it has created "will take time,".

In India, motor vehicles including cars, two-wheelers and sports utility vehicles (although not electric vehicles), attract taxes as high as 28%. We remain confident that the Government will do everything possible to support industry and employment. "We recognise the strong proactive efforts being made by the government to support various sectors of the economy and appreciate the fact that it is open to examine this issue despite the current challenging revenue situation", it added.

Toyota, which also has an alliance with Suzuki Motor Corp to sell some of Suzuki's compact cars under its own brand, is now utilising just about 20% of its capacity in a second plant in India.

Toyota has tied up with Suzuki to jointly develop electric and hybrid vehicle technology at affordable costs. While Baleno has been rebadged as Glanza, the Brezza has been named Urban Cruiser and will be launched on September 24. Only the headline has been changed.

This story has been published from a wire agency feed without modifications to the text.

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