Maruti Suzuki India chairman R C Bhargava says high taxes on fuel and upward change in road and registration charges by state governments resulted in creating a burden on car buyers
NEW DELHI: Amid a clamour from the crisis-hit auto industry for a GST rate cut to 18 per cent from the existing level of 28 per cent, Maruti Suzuki India (MSI) chairman R C Bhargava has said a temporary cut in GST would hardly make a difference, emphasising that the move should be avoided. It is worth noting that car sales tumbled for the tenth straight month in August by 31.57 per cent to 196,524 units, the sharpest since 1997-98.
Bhargava stated that a“paralysis of decision-making” in the banking sector coupled with the introduction of airbags and anti-lock braking systems (ABS) as mandatory safety features in new cars have made them dearer and inaccessible to the two-wheeler rider, highlighting that entry-level cars have become unaffordable to buy and maintain for many middle-class families.
“The guy who rides a two-wheeler wants to upgrade to a four-wheeler. But he’s unable to do so in terms of his financial capacity,” the Maruti chairman told a leading daily. It is worth noting that auto industry body Siam and other auto companies’ CEOs hold complete different views on GST from Bhargava’s, and they have urged the government to reduce tax on vehicles to 18 per cent.
According to Bhargava, high taxes on petrol and diesel and upward change in road and registration charges by state governments resulted in creating a burden on car buyers, the daily said. He mentioned that the current slump in the auto sector is unrelated to “structural shifts” because of the rising popularity of ride-hailing giants such as Ola and Uber.
Bhargava elucidated that the downturn is due to several factors, including stricter safety and emission rules, rise in insurance costs, and additional road tax in around nine states, highlighting the cumulative effect of the factors has raised the cost of an entry-level car by about Rs 55,000, including around Rs 20,000 through higher road tax in many states. Plus, the main issue is the unwillingness of the banking sector where executives are “very shy of taking the slightest risk” in terms of releasing fund.
The daily quoted Bhargava as saying, “The Indian car buyer is not like the European or the Japanese car buyer. The per capita income here is around $2,200, China has around $10,000, and Europe about $40,000. How do you compare with those people? But when it comes to regulations, everybody in India says we must have the best regulations, you have to look at the affordability of a product considering the Indian level of incomes and not somebody else’s level of income.”
Source- Times Now.