Toyota Kirloskar Motor remains committed to its India operations even as it continues to request the government for a viable tax structure, in the wake of the coronavirus (Covid-19) pandemic, the company said in a statement on Tuesday. “We would like to state that we continue to be committed to the Indian market and our operations in the country are an integral part of our global strategy,” it said.
The statement follows a Bloomberg report which said that Toyota did not plan to expand further in India. The company had cited high taxes as the reason for the same.
“The message we are getting, after we have come here and invested money, is that we don’t want you,” the news agency reported quoting Shekar Viswanathan, vice chairman, TKM. In the absence of any reforms, “we won’t exit India, but we won’t scale up,” he said.
With less than 3 per cent share in India’s passenger vehicle market, TKM like most other auto firms has been hit hard by the Covid-19 pandemic.
Auto sales in India had slowed down considerably much before the Covid-19 pandemic-- since September 2019, as a slew of regulations, high cost of ownership and a slowing economy deterred buyers. As a result, sales skidded to a decadal low in fiscal 2019-20.
In an interview with Business Standard last month, Viswanathan said the company was revisiting all aspects of operations—from product launches to marketing and sales expenses as part of an exercise to pare fixed costs and variable costs.
Automobiles, categorised among sin goods, attract 28 per cent rates – the highest tax slab in the Goods and Services Tax (GST). India’s auto industry, which accounts for 49 per cent of the manufacturing GDP, has been lobbying for a reduction in GST.
“In the wake of the slowdown that has been exaggerated by the Covid-19 impact, the auto industry has been requesting the government for support to sustain the industry through a viable tax structure,” TKM said in a statement. It remains confident that the government will do everything possible to “support industry and employment,” it said.
Toyota’s recent partnership with Suzuki in India on sharing technology and best practices are also in line with the government’s 'Make in India' initiative and aims to enhance the competitiveness of both the companies.