Modi government can’t afford Toyota, Maruti’s low taxes ask

a car parked in a parking lot

© Provided by Quartz

Last month, a senior executive of carmaker Toyota declared that the company was going to put all future investments in India on hold owing to the high taxes the country charged on cars. Even as the Japanese multinational later made a U-turn on the comment, the high taxes are a thorn in the flesh of automakers in India who are struggling to survive the pandemic-triggered slump.

India’s auto industry has been in a free-fall since March when the Narendra Modi government first announced a nationwide lockdown due to Covid-19. In April, no cars were sold in India, and things didn’t change much in May. Now, with lockdowns in most parts of India lifted, auto sales are slowly recovering but there are concerns that customers may stay away due to the overall economic slump.

And the high tax rates may keep shoppers away for a long time.

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