Toyota stops India expansion plans| cites high taxes as the reason

Toyota Motor Corp. has decided to stop India expansion plans citing high taxes in the country as the reason. This news comes as a setback for the Modi government who has been trying hard to make India a global manufacturing hub.

Toyota began its operation in India in 1997. Unlike General Motors and Ford, Japanese carmaker Toyota won't be leaving the Indian market but will halt expansions plans in the South Asian country as long as the high tax regime continues.

"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.

In India, motor vehicles attract 28% GST. These taxes can go even higher depending upon the engine capacity, car type, and length. A 4-meter long SUV with an engine capacity of more than 1500cc can attract taxes as high as a whopping 50%.

This move by the Japanese auto car maker should give a wake-up call to the Indian government to review the tax regime in the country.