Toyota Motor Corp has reportedly said that it will not carry on with further expansion plans in India owing to the country’s taxation issues.
The government keeps taxes on cars and motorbikes so high that companies find it hard to build scale, said Shekar Viswanathan, vice chairman of Toyota’s local unit, Toyota Kirloskar Motor. The high levies also put owning a car out of reach of many consumers, meaning factories are idled and jobs aren’t created, he said.
“The message we are getting, after we have come here and invested money, is that we don’t want you,” Viswanathan said in an interview. In the absence of any reforms, “we won’t exit India, but we won’t scale up.”
India is planning to offer incentives worth $23 billion to attract firms to set up manufacturing, people familiar with the matter said last week, including production-linked breaks for automakers. The South Asian country is the fourth-biggest car market in the world but international players have struggled to find a niche in a sector that’s dominated by cheap, fossil-fueled vehicles.
Toyota, one of the world’s biggest carmakers, began operating in India in 1997. Its local unit is owned 89% by the Japanese company and has a small market share — just 2.6% in August versus almost 5% a year earlier, Federation of Automobile Dealers Associations data show.