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TVS, Maruti Suzuki Bosses Ask Govt To Reconsider Automobile Taxation Policy

R C Bhargava, chairman of Maruti Suzuki, and Venu Srinivasan, chairman of TVS Motor

At the 61st annual convention of the Society of Indian Automobile Manufacturers (SIAM) event held in the capital on Wednesday, R C Bhargava, chairman of Maruti Suzuki, and Venu Srinivasan, chairman of TVS Motor, asked he questions tough questions on the government’s intent about automobile industry revival. Revenue secretary Tarun Bajaj and NITI Aayog CEO Amitabh Kant also marked the presence. 

The auto majors feel that the government must consider a reduction in taxes and also expressed concern about not getting the due recognition of industry contribution towards India’s growth as cars were put under luxury that only the rich can afford.

RC Bhargava, Chairman, Maruti Suzuki India, said, “The rates of GST are more than double in India, compared to the EU, Japan or the US, and given the lower income levels in India, the question of affordability comes in. GST is not the only thing. States have this one-time road tax, which takes the tax rate to 37-38 per cent on cars. Do we need the kind of high taxes we have? I don’t think the automobile market is going to revive.”

Society of Indian Automobile Manufacturers (Siam) in the event stated that total auto volumes in the domestic market in 2020-21 took the industry backwards by six years. Passenger vehicle volumes in FY21 touched the lowest mark since 2015-16; two-wheeler volumes have reached the nadir since 2014-15.

Sales of commercial vehicles in FY21 hit the worst in 11 years; three-wheelers vehicles reached the lowest in 19 years. Siam blamed the high goods and services tax (GST) and a hike in road tax as the reason behind the increased cost of ownership.

TVS chairman Srinivasan spoke the same language as Bhargava, telling India’s two-wheeler industry is the largest in the world and the vehicle is considered as a necessity for the common man rather than a luxury, still, the GST rates mirror those for luxury cars.

“The price of the moped has gone up 45-50 per cent. The GST on two-wheelers is the same as a luxury-level product. Is the auto sector being recognised for what it has contributed to the environment, revenue, and foreign exchange earnings? That is the question R C Bhargava has raised,” said Srinivasan.

Upon coming the chance to address the event, Tarun Bajaj asked if taxation is really an impediment in the way of industry growth or not. “I want to understand before GST came, what was the taxation structure in large auto markets? Was the taxation structure any lesser? I think it might have been a little higher. We can’t decrease taxes without knowing whether that will actually lead to a corresponding increase in auto sales,” he said.

The sales of sport utility vehicles (SUVs) have risen whereas sales in other segments have not. “I am keen to understand the reason behind the fall in numbers after 2017-18 for a sector that promised high growth a few years back,” said Bajaj. Further saying, “A 360-degree view must be taken before making a decision.”

 Last year, Shekar Viswanathan, former vice-chairman of Toyota Kirloskar Motor, had raised concerns over taxation implementation on cars and motorbikes hindering the growth of his company. 

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