Toyota Innova Crysta vehicles at the Toyota factory, in Bengaluru | Bloomberg
Toyota Innova Crysta vehicles at the Toyota factory, in Bengaluru | Bloomberg
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Narendra Modi says, “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 a $23,000 Toyota sedan — and fill it up with highly taxed gasoline that costs three-quarters more than what Americans pay.

Modi said in an early 2018 television interview that those earning $3 a day by selling “pakoras” — Indian fritters — should also be counted as employed. That would leave the government off the hook for the absence of new jobs in the formal economy. This false pakora/Toyota equivalence must end. India should enable large companies to grow and create good jobs with social security. When they’re more productive and paid a little better, low-wage workers will be able to afford Made in India shirts and trousers, which, as economist Rathin Roy has noted, are more expensive than imported clothing from Bangladesh and Vietnam.

Ultimately, the Modi government needs to focus on one simple statistic highlighted by Ambit Capital Pvt. and Singapore-based investor Akash Prakash. As much as 40% of the country’s listed nonfinancial firms have revenue of less than $15 million. They’re tiny even by emerging-market standards, and the ratio hasn’t increased at all over the past decade.

Just when India should be presenting itself as an alternative to China by making it easy for enterprises to scale up, the Soviet-style statism that New Delhi discarded three decades ago is creeping back into politics, policies,and even court orders. The first step for course correction will be to listen to criticism, rather than dismiss concerns as sour grapes or fake news. Otherwise, India Inc. will consist of a handful of very large business islands surrounded by tiny atolls that will be first to go underwater in bad weather.


Also read:Message we get is we don’t want you – Toyota stops expansion in India saying taxes too high


 

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62 Comments Share Your Views

62 COMMENTS

    • Mr Vinay: Anything more substantive to add to the debate apart from spreading the canards of the BJP IT Cell ? Or are you also one of those intellectually impotent gaurakshaks who lacks the skills to muster a cogent argument ?

    • A lot of truth in what you say Mr Jacky dada !

      Perhaps that is why the chappathi fellows come with their begging bowls to the South !

    • ‘86% will vote Modi for his path breàking leadership. ‘

      That is 100% of the Hindu population. Do you mean to say Hindus are uniformly stupid ?

        • How is this hate speech ? I am questioning the logic of Raj. He said ‘86% will vote Modi for his path breàking leadership. ‘

          Since Hindus are 86% of India’s population, and only they vote for BJP, I asked Raj if he imagines all the Hindus are stupid ?

          I am not saying all Hindus are uniformly stupid. In fact, I am saying the opposite. I am asking if Raj thinks that all Hindus are stupid.

          But since you cannot read and comprehend and you repeatedly make pleas for censorship, one has to assume you are at least a part of this 86% with limited intellectual grasp.

    • Mr Raj: You bray:

      “.. 86% will vote Modi for his path breàking leadership ..”

      I would rather call it nation breaking demagoguery, spiced with economic ruin, foreign policy débâcles, military losses, a breaking of the social fabric of the nation deep polarisation.

      A leader needs to unite the country, not polarise it along religious or regional lines. Modi is unfit, incapable and unwilling to do that. But then, as long as blinkered, blind bhakths like you exist and inhale the hot air of Arnab Goswami, India’s future is in doldrums.

  1. Dr.MANMOHANSINGH, the most qualified PM, in the world during his time & a world class economist had predicted that the economy would be a disaster under Modi & it’s absolutely true.

  2. Toyota and Pakora both Elitist Andy. It is not one or the other in a big country like India with varied demography. Stop Blaming Pakora because it does not suit your elitist gut. There are thousands of people living on selling Pakoras and they appear as citizens to BJP and Modi unlike the congress and the elite left parties. You elitist educated crowd and the JNU left gang under Yechury are hell bent on humiliating them because they don’t appear to you as bonafide Indian citizens and part of modern elitist India that you want to build. May be they are tribal Bhoomiputras to you and you want them only for their caste and votes. Their skin tone may not match the elitist people who go to top schools in the city and they are your maids, drivers, cooks etc. So stop saying leftie it is one or other. You may not be able to buy a Toyota if there are not thousands of folks selling pakoras. The linkage is important in a macro-view of the economy so it is clearly not one or other, it is both. Have some honesty when you make intellectual arguments. So stop this false equivalency and work for the real betterment of people. What goes around comes around elitists? Got it?

    • Your model chai wallah, who rose from a humble background to such a height, now wears a new suit every day, and he has bought himself a Boeing for his travels. His vanity knows no bounds. He had a pin stripe suit made for Obama’s visit with his name written in the stripes. It was auctioned for 1 crore.

      Then, is their any substance in your plea that elitisits are mocking pakora sellers, while the new age ruler is the anti-thesis of that ?

      The fact is the BJP also wants to pose that it is bringing FDI, and enticing companies to leave China and come to make in India. If you want to do that, you need to be in tune with international expectations of companies like Toyota.

      The other fact is that Dr. MMS actually took care of all sections of the Indian economy, including the pakora sellers – without making it a polemical issue. Modi destroyed the pakora sellers and the informal sector which is 85% of the economy, with demonetisation. His cow lynchers destroyed the small farmer. small meat trader and the leathet business – it has been driven to Bangladesh. His callousness came out in the way the migrants were treated. Modi has enriched the super elites – Ambani and Adani. Go by the result, not his rhetoric. Dr. MMS and Dr. Kalam also came from humble backgrounds.

      Unlike Dr. MMS and Dr. Kalam, Modi behaves like the arriviste, living an elitist life to the full now, while using his alleged humble background to cover it.

  3. Modi is cent percent correct. Everybody cannot get job. Starting own business and be boss. Selling pakora is not easy. Selling a car which is not an essential is easy. Human can live without car, TV and so on.

    • ‘Everybody cannot get job.’

      Only the ones with forged degrees can get the best job !

      Or you must have done a fake encounter.

      10th standard pass can be education minister.

      And for the above three, being Hindu is the first qualification.

      As for the pakora seller, the same people will boycott him saying he is spreading Covid near their housing colony, and they will order him to march 500 kms. back to home.

  4. “The first step for course correction will be to listen to criticism, rather than dismiss concerns as sour grapes or fake news”

    Alas, in Modistan, the first step would be to file sedition charges on bringers of bad news. After all, not only to Modi but also the many blinkered, blind bhakths who worship the Gujarati Prophet would shoot the messenger who brings bad tidings. Modi is infallible and all knowing. A man who knows more economics than the Raghuram Rajans, Arvind Subramanians, Urjit Patels and others who probably went to Harvard instead of indulging in hard work. And gaurakshak activities.

    • We thought the noble intentions of the man is to bring prosperity to all … but looks like he is hell bent on bringing down all the rich people who had to not shed a drop of sweat as they worked comfortably in ac offices.

      Equitable distribution is noble. But equitable distribution of poverty is not what we voted for …

      • ‘But equitable distribution of poverty is not what we voted for …’

        Modi promised 15 lakhs in people’s accounts from retrieved money from the black economy. That would have been equitable distribution of riches.

        People probably did not believe that. Hindus voted for Hindu communalism. Modi has delivered on that. The rest was a jumla as explained by Amit Shah. Instead of bringing back the black money from abroad, he has aided the bank defaulters to get out of India.

  5. The most stupid article. Can the author explain why Vehicle sales especially Car sales slumped all across the world more so in all European countries. Stupid asshole armchair experts who write for the unprintable print keep vomiting junk all the time. They must become factual and remove the convulsive, compulsive congenital Modi hatred and balance their views

  6. Toyota should get out of India. It is not the place for manufacturing.

    Some multinationals like GE have opened an R & D centre, but most realise they cannot make India into a production hub.

    India has many limitations like uneducated work force, corruption, high land price, poor infrastructure. Communal strife can break up India, so it is a risky place to put assets.

  7. Not long ago, the same Hindus were boasting that India’s advantage over China was the youth dividend.

    What have they thought out for the youth ? Sell pakoras, and use sewer gas to boil kettles and sell tea as advised by Modi.

    If you are Hindu, you can also go into gau shala business, shakha attendant job, IT cell and fake news industry…. besides dacoity and rape.

      • I second that view Ms Anuska.

        I wonder whether the Moderators at The Print are on strike !!

        Rasgolla is the worst of the hatemongers here in these columns.

      • How is it hate speech ? It is factually correct.

        Sell pakoras was Amit Shah’s advice.

        Use sewer gas to boil water in kettles and sell tea was Modi’s advice.

        If you are Hindu, you can also go into gau shala business, shakha attendant job, IT cell and fake news industry…. besides dacoity and rape. No Muslim, Christian or Sikh has this option. True or not ?

        If I said all Hindus are dacoits and rapists, you can say it is hate speech. I only said Hindus have this option.

  8. GOVERNMENT HAS TO REDUCE GST ON OUTWORD SUPPLY OF CARS AND SPARES FROM 28% TO 18% IE STANDARD RATE IS ENOUGH FOR BUT CARS ARE USED ULTIMATELY BY CONSUMERS IE B2C TRANSACTIONS IT IS TOTALLY BURDEN ON COMMON PROPLE

  9. Very long back only they said stop education and stop looking for jobs and be ready for Pakora vendors……I think you are very late Toyota.

  10. ‘Toyota or pakora? Modi govt must choose’.

    Modi has chosen pakora sellers for Indian youth.

    The title should be Toyota or pakora? Hindus must choose Modi or not.

  11. So many educated people in Niti Aayog. They should have given better advice, got it acted upon. 2. Very fastidious about diet, seldom eat pakoras. The only exception is at Delhi Gym. Small cylinders of protein, a light batter covering, mint chutney that is not too spicy.

  12. There is no question that what we will choose. Definitely we will choose Pakora in place of Toyota and will support Hon. Narandra Modo ji. We can eat Pakora and fill our stomach but we can’t eat Toyota .

  13. The big issue is not about Toyota investing in India or not, it is about auto industry being taxed to death. This issue is not created by Modi, he has inherited, but he should speed up the resolution.

    While the point raised is very important, trying to season every report with demonitization/ gst etc makes it difficult to get the gist, and leaves the average reader trying the judge the writer as being pro/ anti- Modi.

    More power to unbiased reporting, and hope you move in that direction.

    • Mr Avi Pratap Singh: The bhakth in you makes you bray :

      “.. This issue is not created by Modi, he has inherited .. ”

      Is that not a different way of saying it is Nehru’s fault ? After all, in your blinkered worldview, Prophet Modi is faultless isn’t he ? And everything that goes wrong in 2020 must be the fault of Nehru right ?

      In any case, you seem to understand even less economics than the pogromwala. Fact is Mr Avi Pratap Singh, economic policies have long term effects – for good as well as bad. Lives and livelihoods destroyed by ill-conceived economic policies such as demonetisation and GST do not simply return to their original state. Sucking out 86% of the liquidity in the economy is akin to sucking 86% of your blood and then slowly re-injecting new blood. You would be dead by then won’t you ?

      Economic policies need to be timed and sequenced carefully. At a time when Chinese manufacturing was facing issues, oil prices were low and the country had inherited a relatively well-functioning economy from Dr Manmohan Singh, the preacharak-cum-pogromwala-cum-pradhan mantri chose to demonetise and create an unwanted liquidity shock. That hard blow to the solar plexus of the Indian economy threw 82% of India’s workers who toil in the informal sector into distress. And neither the workers nor the informal sector has made a proper recovery, not even partial.

      Worse still, smart, wealthy and usually shady operators in the Indian economy such as politicians were tipped off and managed to convert their assets to hard currency before demonetisation was announced. And even today, the exodus of capital from India – the economic term for that being capital flight – continues. The rich have now ensured that they have channels to get their assets out of the country.

      The sad thing is that despite the advice given to PM Modi by crack economists like Dr Raghuram Rajan, Dr Arvind Subramanian, Dr Urjit Patel and others at the RBI, the PM preferred to take advice from a quack called Anil Bokil from an obscure Poona based NGO.

      Demonetisation badly hurt the poor while the rich escaped relatively unscathed as these economists had predicted.

      As the French writer and novelist Anatole France (1844-1924) wisely said:

    • Very well said Mr KS Ramprasad !

      When you sideline trained, worldclass economists like Dr Raghuram Rajan or Dr Arvind Subramanian and replace them with the khaki clad quacks of the RSS, the results are fairly predictable. But the average bhakth, who has overdosed in the hot air of Arnab Goswami and is a graduate of Whatsapp University will still tell you that it is Nehru’s fault !!

    • Mr Avi Pratap Singh: The bhakth in you makes you bray :

      “.. This issue is not created by Modi, he has inherited .. ”

      Is that not a different way of saying it is Nehru’s fault ? After all, in your blinkered worldview, Prophet Modi is faultless isn’t he ? And everything that goes wrong in 2020 must be the fault of Nehru right ?

      In any case, you seem to understand even less economics than the pogromwala. Fact is Mr Avi Pratap Singh, economic policies have long term effects – for good as well as bad. Lives and livelihoods destroyed by ill-conceived economic policies such as demonetisation and GST do not simply return to their original state. Sucking out 86% of the liquidity in the economy is akin to sucking 86% of your blood and then slowly re-injecting new blood. You would be dead by then won’t you ?

      Economic policies need to be timed and sequenced carefully. At a time when Chinese manufacturing was facing issues, oil prices were low and the country had inherited a relatively well-functioning economy from Dr Manmohan Singh, the preacharak-cum-pogromwala-cum-pradhan mantri chose to demonetise and create an unwanted liquidity shock. That hard blow to the solar plexus of the Indian economy threw 82% of India’s workers who toil in the informal sector into distress. And neither the workers nor the informal sector has made a proper recovery, not even partial.

      Worse still, smart, wealthy and usually shady operators in the Indian economy such as politicians were tipped off and managed to convert their assets to hard currency before demonetisation was announced. And even today, the exodus of capital from India – the economic term for that being capital flight – continues. The rich have now ensured that they have channels to get their assets out of the country.

      The sad thing is that despite the advice given to PM Modi by crack economists like Dr Raghuram Rajan, Dr Arvind Subramanian, Dr Urjit Patel and others at the RBI, the PM preferred to take advice from a quack called Anil Bokil from an obscure Poona based NGO.

      Demonetisation badly hurt the poor while the rich escaped relatively unscathed as these economists had predicted.

      As the French writer and novelist Anatole France (1844-1924) wisely said:

      “The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread”

  14. Author talks of govt doing headline management– and he brazenly does the same for eyeballs.

    And DOOMBERG has been doing this for years, even when economy was galloping in 2015-16. Their mandate is to spread doom and gloom. Like the so-called ‘rating’agencies Moody’s, S& P, et al who were all caught with their pants down in the 2008 financial crisis (they had given investment grade ratings to companies that were worthless).

    Japanese companies in the 1990s after India opened up it’s economy similarly expressed their disdain for Indian consumers. The likes of Sony, Panasonic, Toshiba, Hitachi were all left by the wayside by Samsung, LG, Hyundai and now defunct Daewoo.

    Suzuki’s JV with Indian govt, Maruti Suzuki — was the exception — coz’ they took Indian consumer, seriously and came up with cars that were engineered and priced for the market.

    You can choose to ignore the customer at your peril. Maybe Toyota’s management should take a refresher course at a B school. Their MBAs are outdated.

    • Mr Mandal: I am quite sure the management at Toyota would diligently read your advice:

      “.. Maybe Toyota’s management should take a refresher course at a B school. Their MBAs are outdated ..”

      And would perhaps conclude that you went to the Nirmala Sitharaman School of Economics & Management !

      Every firm defines a market for its products and the precise mix of products that it intends to sell in that market at a given point in time. A firm may choose to not enter a given market based on its assessment of the risk-reward profile of that market. As Toyota has done with regard to the Indian market.

      Additionally, a firm like Toyota would also be looking at the management of the economy by the government and the many macroeconomic indicators of the health of the economy. And you don’t need a genius to tell you that the Indian market was and is extremely risky and especially so due to the pracharak’s unpredictable management – or shall we say mishandling – of it. And that was well before the COVID crisis struck and the unwanted chest-thumping of Amit Shah provoked Chinese military action.

      Perhaps Toyota might have concluded that it was time to leave the Indian market for now and re-enter it later. Or leave for good.

      Bottomline: No firm wants to sell to every customer and to every market. Trade-offs are made all the time.

      Hence, my unasked for advice to Toyota: Please ignore the advice of Mr Mandal, a graduate of the Nirmala Sitharaman School of Management !

  15. As is cars in India has high price and very low on features. Say a 2020 Honda CRV in USA will have more features and less cost than in India.

    Greedy country

  16. Well , MG , Kia , Renault and Jeep chose the very same market. Wonder which brand is busy serving and gorging on pakodas because its been over three years now and Toyota hasn’t come out with a single new model for the Indian market. Wonder why its share in the Indian market is going down while Kia and MG made the grandest of entries and are giving veterans like Hyundai and Suzuki a run for their money in certain segments.

  17. We have had enough of this well intentioned but misdirected governance.
    I wonder why the bureaucracy,intelligentia,and the manufacturers are queit?
    Unfortunately the alternative is to fall on the lap of the family with all its ills.
    Can we not learn from other countries? Is it our lot to worship the Hindu rate of growth?

  18. Good article with convincing data… highlighting effects of political decision making on businesses operating in India.

    However taxes are not just collected only from consuming middle class. Everyone pays indirect taxes. Even the very poor pay indirect taxes.

  19. Problem is that the poor are so many and literally worthless as employees that they need all sorts of subsidies to survive. They can’t live on their own. And then we have 200 million Muslims, most of whom are absolutely worthless as productive citizens, but add to security costs of country as they are potential hostile enemy population. So more costs. That’s around 700 million people ,living of the other 700 million productive people. So high taxes are not a choice

    • So Muslims are to blame for why Hindus could not become a superpower ! Whereas Hindus are the most productive citizens : they are engaged in riots and rape, and can become PM with a forged degree.

      ”but add to security costs of country as they are potential hostile enemy population.”

      China is going to add to your security costs. China, Pakistan and 200 million hostile enemy population will sink the Hindus ! Commit suicide.

    • Dear Moderators:

      Assuming that you guys are not sleeping, please remove this hate-filled comment from Sid.

      If such comments are allowed, please state them in your commenting policy and I will stop reading The Print.

  20. FYI-
    In South, below Maharashtra, Pakora walas earn 4X to 10x higher than any low pay Toyota job.
    Pakoras represent ex of catering to 80% of population. India needs innovators who do the same. Cater to the majority. Not just 10%.
    And for print- stop this omnipresence of dishonest Bloomberg reports which are as usual disdainful, dishonest as usual and represent American capitalist interests.

  21. Other companies from south Korea and Suziki have adapted and are able to sell with same high taxes. Problem is Toyota does not have appealing cars for Indian population. Second, they want to import cars by manufacturing in Japan and SE Asian countries. Duties are obviously high. Author should write without political bias, which shows in the title also

  22. Man these Leftist Jurnos are so fucking bad. I still remember these people complain about corporate tax cuts. And they are complaining about the taxes face by a car company. Its very clear that the statement by that executive was to put a kind of pressure on the government to reduce taxes. But the Indian automobile taxes are in line with global standards. Instead, they should cut royalties..

  23. The Print, stop peddling fake news. Both a union minister and Toyota has confirmed that Toyota isn’t stopping India expansion. So stop lying.

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