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Japanese carmaker Toyota will no longer develop its operations in India. The decision is viewed as a setback for the Indian government, which has been especially welcoming to foreign companies to attract global value chains.


Toyota started operations in India in 1997 with 89pc of its local company owned by the automaker. The company said it remains committed to India and to safeguarding area jobs, but expanding or even using up its total capacity in the country, will not happen soon because of the excessive tax regime. For example, only 20pc of capacity at the Kirloskar plant is currently being utilized, according to media reports.


Autos draw up to 28pc in taxes in India, with the possibility to extract further duties that range from 1-22pc based on full car details. 


The carmaker’s local unit believes that the government, which is planning to offer as much as $23bn in incentives along with auto production opportunities, will do what is necessary to back the industry, according to media reports. Foreign investment to entice the manufacturing business is also being encouraged.


Global auto companies have had difficulty growing in India, the fourth-largest auto market in the world. As a result, Ford decided to transfer its resources in 2019, from India into a joint venture with a local car manufacturer after facing over 20 years of toil to gain consumers, while GM left the country in 2017.


Toyota said the existing, penalizing taxes are hindering global investment, taking away margins for automakers, and creating excessive charges to introduce new products, according to reports. High taxes have also made it difficult for many consumers to own a car which leads to plant idlings and job loss.

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