Maruti Suzuki calls for reduction in taxes on automobiles

Tax on automobiles in India is higher compared to many other countries and there is a need to reduce it in order to create demand and develop the industry, Maruti Suzuki India Managing Director and Chief Executive Officer Kenichi Ayukawa has said. At present, automobiles attract peak GST rate of 28 per cent with additional cess ranging from 1 per cent to 15 per cent depending on length, engine size and type.

Speaking to news agency PTI, Ayukawa said, "Compared to other countries, tax is a bit high (here in India). In order to develop the industry, we have to ask the government to reduce taxes, which we understand is not easy". He further said, "We have to collaborate with the government to try to find some solution. In order to encourage demand, the best way is to reduce taxes." When asked about expectations from the Budget, he said the upcoming interim Budget "might be tentative".

"The Budget that would come after the elections could be important. Of course, we are constantly communicating with the government to encourage the industry with reduced taxes. We know that it is not easy," Ayukawa added.

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The call for reduction in taxes on automobiles comes in the backdrop of decline in domestic passenger vehicles (PV) sales, which dropped in December 2018 for the fifth time in the past six months.

In the April-December period of this fiscal, PV sales in India grew by 4.37 per cent to 25,33,221 units, against 24,27,046 units in the year-ago period, according to SIAM data. In December, MSI had cut its sales growth forecast for the current fiscal to 8 per cent mainly due to subdued demand on account of high interest rates and increased insurance cost. It had earlier projected a double-digit growth for 2018-19.

Earlier, Tata Motors VP (sales, marketing and support) SN Barman said the industry is likely to grow by two to three per cent in the upcoming fiscal as against the initial prediction of seven per cent. In the third quarter of this fiscal, the industry saw a degrowth of seven per cent. The company is gearing up to launch its electric car 'Leaf' in the next six months in partnership with another leading automotive maker Nissan India.