S. Korea’s Hyundai Mo­tor says In­dia tax re­forms a ‘set­back’

Business World - - CORPORATE NEWS -

NEW DELHI — South Korean auto gi­ant Hyundai Mo­tor says that fresh changes to In­dia’s new na­tional tax had shaken in­dus­try con­fi­dence in the coun­try with firms al­ready strug­gling to boost sales.

The In­dian govern­ment launched a new na­tional goods and ser­vices tax in July to re­place more than a dozen sep­a­rate levies and trans­form the $2-tril­lion econ­omy into a sin­gle mar­ket for the first time.

The goods and ser­vices tax (GST) sets out four dif­fer­ent rates of be­tween five and 28% for busi­nesses in­stead of the one orig­i­nally en­vi­sioned.

How­ever, the govern­ment has made sev­eral changes to the tax regime re­gard­ing some prod­ucts in­clud­ing sports ve­hi­cles, and lux­ury and hybrid cars, which auto mak­ers com­plain have forced them to al­ter their pric­ing strate­gies.

“The re­cent rolling back to mul­ti­ple rates with pre-GST clas­si­fi­ca­tion has come as a set­back to the in­dus­try, shak­ing the con­fi­dence of auto man­u­fac­tur­ers,” Hyundai said in a state­ment.

“We ex­pect the com­ing fes­tive sea­son (Di­wali) will wit­ness low cus­tomer sen­ti­ment on new pur­chase de­ci­sion.

“Fur­ther, in the ab­sence of con­sis­tent and long-term pol­icy the in­vest­ment for new prod­ucts and new technology will be ad­versely im­pacted,” it added.

In­dia’s eco­nomic growth slumped to 5.7% in the first quar­ter of the fi­nan­cial year ow­ing to a con­tro­ver­sial ban on high-de­nom­i­na­tion notes in Novem­ber as well as the GST roll­out.

Auto mak­ers have also com­plained about a re­cent govern­ment push to switch cars to elec­tric by 2030.

This would re­quire them to make mas­sive fresh in­vest­ment and man­u­fac­tur­ing plans in­clud­ing set­ting up new plants and sup­ply lines. —

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