The auto industry is at a crucial juncture. After two years of nearly washout sales, several supply side headwinds emanating as a result of Pandemic, it finally seems like settling down now as the attention is slowly shifting to the tailwinds ahead. However, 2023 won’t be completely without its share of challenges. RC Bhargava, the Chairman of Maruti Suzuki lists out the key concerns for auto inc going ahead-
Effective policy implementation
According to Bhargava, one of his primary concerns is that the intentions of the govt is not getting translated into action, “Policy implementation needs to be worked upon. India should actively go and reduce tariffs with FTAs. We should remove the protectionist mentality.” He highlighted that this is important to enable Auto Inc’s growth under competition.
Taxing times
As the budget comes closer, the focus does shift towards taxes. The auto industry is, on an average, taxed around 28 percent GST with additional 1-22 percent cess based on the type of vehicles. That apart there are other related taxes as well Bhargava called out for the need to review the tax structure as “they have always been in the higher tax bracket. You can’t grow an auto industry with 50% taxation! Bring it in line with the rest of the world.”
Citing examples globally, Bhargava pointed out that VAT is 19 percent in Europe and 10 percent in Japan. In India we are 40% plus. He highlighted that “the old socialist way of thinking is saying cars are luxury products so they need to be taxed higher.”
He reitereated that, “GST should eventually have a single slab. For healthy growth of auto industry the base of consumers has to increase.”
Safety concerns
Maruti cars have often come under the radar for scoring poorly at the GNCAP crash tests. However according to the chairman of the passenger vehicle market leader, safety entails preventing accidents and with this regard we need to focus on, “Two major areas where we are way behind – one is vehicle fitness, how do you ensure these vehicles remain as compliant as when the car was sold. Second, is how much does a person who gets a licence know about driving safely, We need better enforcement of laws.”
