Unhappy with Government’s policy and court’s intervention, many foreign car companies are reviewing their business plans in India.
“Foreign car companies are seriously concerned about the change in policy of the Government and judicial interventions have further complicated the matter,” said Siam Deputy Director General Sugato Sen.
Recently, there were reports that Toyota Motor Corp will halt new investments in its India operations till there is clarity on the fate of diesel-powered vehicles.
“We do not plan to launch any new models or make any fresh investments in the country till we know what lies ahead,” Toyota Kirloskar Motor Vice-Chairman at Shekar Viswanathan was quoted as saying.
The Government decided to leapfrog from BS-IV to BS-VI directly by April 1, 2020. Automobile companies voiced apprehension and said it would ‘neither be technically possible nor advisable’ to skip BS-V or advance the onset of BS-VI, before the earlier scheduled 2023. The industry would face other issues while complying with the new standards ahead of schedule. But all reasons given by auto makers fell flat.
After that, Government introduced the 1-4 per cent infrastructure tax for vehicles shipped from March 1 that run on such fuels as gasoline and diesel. The new levy came on top of a 12-30 per cent excise tax on car purchases. Over and above, Supreme Court extending ban on registrations of large diesel vehicles in New Delhi NCR region further complicated the matter.
“Government has for the last a few months taken actions and policies which has, in fact, curbed the growth of car companies than added to the growth of the sector,” said Sen.
“Though cumulatively car companies are doing good, they are not able to realise their full potential and using only 60 per cent of capacity. There are companies like Maruti Suzuki, who is able to use its capacity 100 per cent, but there are companies which are working on 20 per cent capacity,” added Sen.