Recently, reports surfaced online that Toyota has hit the pause button on its expansion plans in India. But then, the carmaker confirmed that it will stay committed to its operations in India as it is an integral part of its global strategy. And now, it has been confirmed that the company is actually focusing on technology expansion and localization and is investing over Rs 2,000 crore for the same.
The official statement was released by Masakazu Yoshimura, Managing Director, Toyota Kirloskar Motor. The same was also confirmed by Vikram Kirloskar, vice-chairman of Toyota Kirloskar Motors.
“Toyota Kirloskar Motor continues to be deeply committed to India and its national objectives. We have firm belief in the core strength of the country’s economic growth potential and are fully committed for continually working towards contributing to the economic development. Keeping in sync with our vision of ‘Grow India – Grow with India, during the past two decades of our presence in the country, we have worked tirelessly to invest in creation of a world-class talent pool and for building a strong competitive local supplier eco-system’ in line with the ‘Skill India” and the “Make in India” initiatives. Our operations in India are an integral part of our long-term global strategy. As part of these efforts, Toyota Group in India is targeting to invest over Rs 2000 crore in India in the coming years on technology and electrification, both for the domestic and the exports market. We reaffirm that TKM intends to make all efforts to promote and introduce newer, cleaner and world-class technologies and services in the market.”
Vikram Kirloskar’s tweet read, “Toyota’s focus is on technology expansion & localization & is investing 2000+ crs for the same. I believe that a GST readjustment is required in the future to encourage green mobility. Carbon-based tax will also make the Indian industry more competitive.”
How it all started
The whole fiasco started with a Bloomberg report which quoted Shekhar Vishwanathan, Vice Chairman of Toyota Kirloskar Motor, he said, “The government keeps taxes on cars and motorbikes so high that companies find it hard to build scale. High taxes have also put owning a car out of reach for many consumers, leading to idle factories and lack of job creation. The message we are getting after we have come here and invested money is that we (the Government) don’t want you. In the absence of any reforms, we won’t exit India, but we won’t scale up.”
He added, “Market India always has to precede Factory India, and this is something the politicians and bureaucrats don’t understand. India needs to have demand for a product before asking firms to set up shop, yet, at the slightest sign of a product doing well, they slap it with a higher and higher tax rate. Such punitive taxes discourage foreign investment, erode automakers’ margins and make the cost of launching new products prohibitive. You’d think the auto sector is making drugs or liquor.”
The current tax structure for ICE-powered automobiles attracts taxes up to 28%, and on top of that, additional levies add another 1% to 22%, depending on the size and fitments on the car. The industry has been in discussion with the concerned ministry for a reduction in taxes, however, given the current situation, it is highly unlikely that immediate relief could be on its way.