In a uncommon face off, captains of the auto trade have hit out on the authorities for not strolling the speak. At an trade occasion within the capital on Wednesday, R C Bhargava, chairman of India’s largest carmaker Maruti Suzuki, and Venu Srinivasan, chairman of TVS Motor, questioned the federal government’s intent to help the auto sector. Revenue secretary Tarun Bajaj sat within the viewers listening, earlier than his flip got here to counter them.
Calling for a discount in taxes, the auto majors expressed frustration that the contribution of the trade in direction of India’s development was maybe not being recognised by policymakers as automobiles have been nonetheless being thought of a luxurious solely the wealthy can afford.
“There have been lots of statements made on the significance of the auto trade. But when it comes to concrete motion, which might reverse the decline in development, I have not seen any on the bottom. I’m afraid phrases do not get us very a lot when it comes to additional gross sales,” mentioned Bhargava.
It was seemingly directed at Bajaj, who, as head of the Department of Revenue, workouts management associated to direct and oblique tax of the union.
Industry foyer group Society of Indian Automobile Manufacturers (Siam) mentioned the general auto volumes in 2020-21 (FY21) within the home market pushed the trade again by six years. Passenger automobile volumes in FY21 have been the bottom since 2015-16; two-wheeler volumes the bottom since 2014-15.
Sales of economic automobiles in FY21 have been the worst in 11 years; for three-wheelers, they have been the bottom in 19 years. Siam blamed the elevated value of possession as a result of excessive items and companies tax (GST) and a hike in highway tax because the killjoys.
Srinivasan echoed Bhargava, saying whereas India’s two-wheeler trade is the most important on the planet and largely thought of a standard man’s mode of transport, the GST charges are much like these for luxurious automobiles.
“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, to revenue, and to foreign exchange earnings? That is the question R C Bhargava has raised,” mentioned Srinivasan.
When his flip got here, Bajaj requested if taxation was the rationale why trade development was impeded. “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 mentioned.
He identified that the gross sales of sport utility automobiles (SUVs) are rising when gross sales in different segments are usually 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,” mentioned Bajaj, including that if taxes are lowered, it’ll power the federal government to borrow extra. This can have a unfavorable affect on the macroeconomy. “A 360-degree view must be taken before making a decision,” mentioned Bajaj.
Bhargava retorted saying the expansion of SUV as a metric is just not the right means since most consumers want entry-level fashions whose costs have gone up by Rs 45,000-50,000 as a result of new security and emission norms, rising insurance coverage, and highway tax.
“Those earning better have graduated to an SUV. But for a large section, like the buyer of an Alto or WagonR, an increase of Rs 45-50,000 is enormous. At the lower end, most can barely afford a car. Please keep the affordability factor in mind,” he cautioned.
This is the second time {that a} distinction in opinion between the trade and the federal government has arisen. Last yr, Shekar Viswanathan, former vice-chairman of Toyota Kirloskar Motor, had mentioned the federal government retains taxes on automobiles and motorbikes so excessive that his firm finds it tough to increase.
But the finance ministry countered saying auto corporations ought to cut back royalty funds to folks overseas as an alternative of in search of tax cuts.
