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Honda India refrains from introducing new models due to tax rates

Honda India refrains from introducing new models due to tax rates
Nikhil Puthran Nikhil Puthran Thursday 22 September 2016, 16:08 PM

Japanese automaker Honda is a popular name across the globe. Though India is one of its largest market, the automaker is limiting itself in introducing new models in the country owing to the unclear tax structure in the country.  Honda Cars India Ltd (HCIL) concern over lack of clarity on the GST rate has also made it difficult for them to plan production in advance.

HCIL President and CEO, Yoichiro Ueno pointed out that the tax differentiation in India is quite huge as compared to other major markets, thereby limiting them in introducing a variety of products in India. In the international market, Japanese automaker Honda has four bestselling models like the Jazz, Accord, Civic and the CRV. However, in India the company is currently restricting itself in selling the Jazz and CRV, wherein the CRV has not been able to generate big sales numbers.

As per current norms, the excise duty is distributed into four slabs – cars less than four metres in length attract excise duty of 12.5 per cent, while those longer than four metres and are powered by engines less than 1,500cc capacity attract a duty of about 24 per cent.  Vehicles that are powered by over more than 1,500cc engines attract an excise duty of 27 per cent and those with a ground clearance of more than 170mm attract an excise duty of 30 per cent.

As the Indian market is price sensitive, the company is waiting for the government to re-examine the tax structure which Honda believes is in favour of smaller cars. However, the company will work a way around this and introduce more cars in the country when the time comes. Sometime by the end of next month, the automaker will be introducing the Accord hybrid in India. As against the 309 dealerships currently, Honda plans to extend it to about 345 dealerships by the end of this year.

 

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