"The auto industry cannot expand with a 50% tax rate," says Maruti Charman RC Bhargava.
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“The auto industry cannot expand with a 50% tax rate,” says Maruti Charman RC Bhargava.

According to RS Bhargava, Chairman of Maruti Suzuki India, car taxes in India are far higher than in other developed countries with high per capita incomes, such as Europe and Japan.

Speaking at a gathering in New Delhi, Maruti Suzuki India Chairman RS Bhargava said that the 50% tax rate would prevent the auto industry from expanding and encouraged authorities to take this into consideration.

“An vehicle industry cannot expand with a 50% tax rate. Where else in the world has a sector like the automotive industry grown with a tax rate of 50%? If the leadership is comfortable with a growth rate of 4% to 5%, who am I to argue? I believe that all motor vehicle taxes should be rationalised,” added Bhargava.

The chairman of Maruti Suzuki India went on to say that he is the government’s biggest supporter. “However, I think that certain judgements are not made in the best interests. The chairman said, “It can happen when the bureaucracy fails to give the political system appropriate information and when public officials give wrong counsel, etc.

Furthermore, he asserted that despite having far higher per capita incomes than wealthy countries like Europe and Japan, India had much higher car taxes.

He responded that it “confirms that they should charge 22% (cess) when four conditions are met, which puts it in the 50% tax rate” when asked about the consequences of the clarification on the classification of SUVs for tax reasons.

According to Bhargava, a significant sector of the Indian auto industry, the regulatory burden is greatest for small automobiles, and having a uniform tax system for all vehicle classes will not be good for the sector’s future.

For the automobile sector to flourish healthily, there needs to be a “continuous increase in the number of new car customers each year,” added Bhargava.

“People buying tiny cars aren’t buying at the same level, which is bad for the sector and the nation.”

Bhargava claims that by filling implementation gaps at the local level, the manufacturing sector, which “sadly” has underperformed despite the best efforts of the Narendra Modi-led Centre, may increase India’s economic growth rate.

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