Industry Can't Grow With 50 Per Cent Tax Rate On Cars: Maruti Chairman RC Bhargava

Cars with an engine capacity of more than 1,500 cc, a length of more than 4,000 mm, and a ground clearance of at least 170mm attract 22 per cent cess

“Government policies are such that they treat cars as luxury products that need to be heavily taxed," RC Bhargava said.

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Maruti Suzuki Chairman RC Bhargava said that high taxes on the auto industry has hindered the growth of the industry, while adding that the industry could not grow with a 50 per cent tax rate. His comments came on the back of the government's clarification on cess on the SUVs and the calls for imposing a higher cess on the MUVs.

Bhargava at an event on Monday said, "How can the industry grow with a 50 per cent tax rate on cars? It is the wisdom of the government. If we don't want the industry to grow and they are alright with a 5-6 per cent growth, then I will not fiddle with their views."

 In the 48th GST council meeting last week, Finance Minister Nirmala Sitharaman further clarified the four requirements for applying the higher rate of compensation cess, 22 per cent, to motor vehicles. Cars with an engine capacity of more than 1,500 cc, a length of more than 4,000 mm, and a ground clearance of at least 170 mm attract 22 per cent cess.

Emphasising that the tax burden on small cars must be reduced, Bhargava said that the regulatory burden is changing market behaviour. He said, "Government policies are such that they treat cars as luxury products that need to be heavily taxed…car affordability is not at all related to income."

At the same event in New Delhi, Hisashi Takeuchi, MD of Maruti Suzuki, said the auto firm is working on reducing CO2 emissions not just in terms of tailpipe emissions but across all aspects of manufacturing. He said, "EV is a strong measure to reduce emissions, but Maruti Suzuki will look at all possible technologies good for India."

The chairman also spoke on various issues concerning the Indian economy. He said that the strengthening of the rupee against the yen had been a positive for Maruti Suzuki. 

"India has the capability of being far more competitive in manufacturing than other nations. FTA opens big export markets, and we can compete not through the dumping route but through our highly competitive products. India should aggressively go and reduce tariffs to increase automobile exports, he added.