In a shocking revelation, Toyota's vice chairman Shekar Viswanathan revealed that Toyota Motor Corp. will not expand more in India due to extremely high taxes. This news comes at a time when the government is trying to lure global organizations to invest in India.

Toyota's local unit, Toyota Kirloskar Motor is owned 89% by Toyota and is facing the heat of shrinked market share of 2.6% in August versus 5% last year. The vice chairman said that high levies are making the ownership of unaffordable for a large set of people leading to decreased demands and idle factories.

“The message we are getting, after we have come here and invested money, is that we don’t want you,” Viswanathan spoke in an interview. In the absence of any reforms, “we won’t exit India, but we won’t scale up.”

In India, two-wheelers, cars, and sports utility vehicles, attract taxes of up to 28%. On top of that, there are additional levies, ranging from 1% to as much as 22%, depending on a car’s type, length or engine's cubic capacity. For instance, tax on a four-meter long SUV vehicle with the engine capacity of over 1500 cc can go as high as 50%.

Ford and General Motors

A car is still considered a luxury in India, hence such large taxes. But due to high taxes, international automakers are struggling to expand in the world’s fourth-largest car market.

General Motors Co. quit India in 2017 while Ford Motor Co. is moving most of its assets in India into a joint venture with Mahindra & Mahindra Ltd. Ford effectively ended independent operations in a country where it once said wanted to become a key player.

What do you think about taxes on automobile in India. Fair or not?