'Auto sector cannot grow with 50% taxation': Maruti Charman RC Bhargava

Maruti Suzuki India Chairman RS Bhargava, while speaking at an event in New Delhi, said that the auto industry would not grow with the 50 per cent tax rate and urged policymakers to think about the growth of the auto sector. 

"With 50 per cent taxation, one cannot grow an automobile industry. Where else in the world has an industry like automobiles grown with a 50 per cent tax rate? (But it's the) leadership's wisdom.... if they're content with 4-5 per cent growth, then who am I? In my opinion, all motor vehicle taxation should be rationalised," Bhargava said. 

The Maruti Suzuki India Chairman further clarified that he is the biggest supporter of the government. "However, in some areas, I believe the decisions are not in the best interest. It can happen when bureaucracy fails to provide accurate information to the political system, and civil servants provide incorrect advice, etc.," the chairman added. 

Furthermore, he claimed that India has significantly higher car taxes than wealthy nations, including Europe and Japan, where per capita income is significantly higher.

When asked about the implications of the clarification on the classification of SUVs for tax purposes, he said that it, 'confirms that they should charge 22 per cent (cess) when four conditions are met, which puts it in the 50 per cent tax bracket." 

The regulatory load is heaviest on small cars, a key segment of the Indian auto industry, according to Bhargava, and having a consistent tax structure across all vehicle classes will not bode well for the sector's future. 

There must be a 'steady increase in the number of new car buyers each year' for healthy growth of the automobile industry, continued Bhargava. 

"People purchasing small cars are not purchasing the same level...this is not good for the industry or the country."

According to Bhargava, the manufacturing sector, which 'unfortunately' has lagged despite the best efforts of the Narendra Modi-led Centre because of implementation gaps at the local level, could boost India's economic growth rate. 

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• Indian automobile industry
• Indian economy
• Maruti Suzuki
• RS Bhargava