View: India needs to choose the economy it wants - Toyota or pakora?

[kevinUsa]

Make in India.” Toyota Motor Corp. says, stop treating cars as though they were drugs or alcohol. The Japanese carmaker has a point about the tax structure being unviable for the industry, and Shekar Viswanathan, vice chairman of the India unit, made it forcefully in an interview to Anurag Kotoky of Bloomberg News. However, instead of trying to address the specific concern about the high sin levies on cars, the government turned it into a public relations issue. The minister for heavy industries, who also looks after information and broadcasting, took to Twitter to announce that “the news that Toyota... will stop investing in India is incorrect.”

 

 

The additional luxury-tax burden — 1% to 22% depending on the size of the vehicle and engine capacity — is what jacks up the overall levy in the world’s fourth-biggest car market to as much as 50% on some sports utility vehicles.

 

Six years of headline management should have been enough for Prime Minister Modi’s government. From justifying its bizarre overnight ban on most banknotes in 2016 to defending suspiciously cheerful gross domestic product data and suppressing a not-so-rosy household consumption survey, Team Modi has left no stone unturned when it comes to spinning a narrative in which it’s doing everything right. The longer this pretense continues, the higher the risk of India getting stuck in a post-pandemic sub-5% growth rut.

 

It’s time to start an honest dialogue with unhappy stakeholders — labor, capital, and subnational governments. Lockdowns are easing even though the coronavirus continues to spread. Workers desperately want jobs to return because there isn’t much of a safety net beyond the family or village. Businesses weren’t investing even before Covid. It’s impossible to cut consumption taxes to stoke demand. India’s fund-starved 29 state governments badly need the sin levies that are earmarked for their exclusive use. Businesses were hoping that these, which are in addition to the regular goods and services tax, would expire as planned in 2022. However, because of the hit to collections this year, they may continue well into the future.

 

That isn’t the whole story. Import duties on steel and electronic components may go up, ostensibly to promote Modi’s Make in India campaign, pushing prices for cars still higher. The market will then be even smaller. So what can be done?

 

Auto analyst Govind Chellappa has practical suggestions. Even if taxes remain high for now, end the constant tinkering with the rates, regulation and the fuel policy — diesel, petrol or hybrid — and commit to stability for 15 years. “It takes 24 to 36 months to develop a new product and another 12 months to set up the physical infrastructure. If taxes and regulation change every 24 months, how does one decide what to invest in?” Chellappa asks. Similarly, the badly designed goods and services levy needs a one-time overhaul, followed by long-term certainty.

 

India must break out of this vicious cycle in which taxes are high, consumer demand is low, investment and job creation are constrained, and wage incomes are insufficient to boost purchasing power at the bottom of the pyramid. Taxes are hence exorbitant and have to be collected from a small consuming class that can afford

[Ryzen_renoir]

We have always a pakora economy ? Infact the introduction of GST actually led to decrease in tax on many products .

Both BJP and congress are center left on economic policies  their protectionist stance is only to save their bania friends from international competition . 

No one is even calling for reduction in taxes , infact congress wants more taxes to distribute freebies .

 

On the policy front I absolutely  agree need a stable policy and a clear vision for atleast a decade ahead , supreme court intervening in auto policy is beyond stupidity . How can courts decide arbitrary rules on an industry it has no expertise in ? 

[tom brady]

4 minutes ago, Ryzen_renoir said:

We have always a pakora economy ? Infact the introduction of GST actually led to decrease in tax on many products .

Both BJP and congress are center left on economic policies  their protectionist stance is only to save their bania friends from international competition . 

No one is even calling for reduction in taxes , infact congress wants more taxes to distribute freebies .

 

On the policy front I absolutely  agree need a stable policy and a clear vision for atleast a decade ahead , supreme court intervening in auto policy is beyond stupidity . How can courts decide arbitrary rules on an industry it has no expertise in ? 

How dare you qs supreme court, the supreme power

[Ryzen_renoir]

2 minutes ago, tom brady said:

How dare you qs supreme court, the supreme power