High tax on luxury cars restricting market, preventing local assembly of more models: JLR India


NEW DELHI, July 21: Jaguar Land Rover (JLR) can assemble more models in India if the taxation structure is “reasonable” and allows for a viable business case, a top company official said.

The company said lowering of GST from the current 28 per cent to 18 per cent would help the industry recover from the slowdown and in turn spur employment generation.

“We already have six locally assembled models now and we would love to do more, provided we have a business case for them. That is where the whole questions come down to as how much volumes can we do,” JLR India President and Managing Director Rohit Suri told PTI.

If the volumes are good, it leads to better business viability, he added.

Suri said JLR India is “eager to bring many more cars and make them in India” but the high taxation is a major hurdle.

“We strongly feel high taxation today does not allow the market to grow and therefore, restricts us from bringing more products that are locally made,” he said while responding to a query on JLR India’s plans to produce more models in India.

Currently, luxury vehicles in India attract the top GST slab of 28 per cent and additional cess of 20 per cent on sedans and 22 per cent on SUVs, taking the total tax to 48 per cent and 50 per cent, respectively.

Suri said the company has a strong product plan already in place and it continues to bring in new models to the country.

“Demand for our cars is very strong and it can become much stronger if the taxation is slightly more reasonable. We are not saying that its should go down to zero but it should be more reasonable, then it helps the overall industry,” he noted.

The automobile industry has been asking the government to reduce GST on passenger vehicles from the current 28 per cent to 18 per cent. The government, however, did not heed to the demand in the Union Budget for 2019-20.

On the company’s plans to expand sales network, Suri said the expansion would happen keeping in mind business viability.

“..the market remains constricted with high taxation. If market expands we can expand our operations as well,” he added.

He said that sales network expansion also helps generate employment.

“With one dealership opening, employment for around 200 is generated. This is what we were trying to pitch to the government,” Suri said.

JLR opened a new sales outlet in Bengaluru last Friday, the company’s 27th dealership in the country.

When asked about the sales outlook, he expressed hope of the market improving in the remaining part of the current fiscal.

“As far as JLR is concerned, we have managed to retain our market share…we had elections in the first quarter and clearly there was an impact of that on the market. Going forward we have the festive season coming in and the hope is that some policy changes the government will do to actually help the industry,” Suri said. (PTI)