Maruti Suzuki India chairman R.C. Bhargava has criticised the 50 per cent tax on SUVs.

In an interaction on Monday evening, Bhargava said the clarification on the definition of SUVs for taxation purposes “confirms that they should charge 22 per cent (cess) when four conditions are met, which puts them (SUVs) into the 50 per cent kind of tax bracket”.

“You can’t grow an automobile industry with 50 per cent taxation. Where in the world has an industry like automobiles grown with 50 per cent taxation, but it’s the wisdom of the policymakers and the political leadership,” Bhargava said.

He said that compared to developed markets such as Europe and Japan, where per capita income is far higher, taxes on cars in India are much higher.

“Now, somebody needs to think about that, should cars be charged more than the average rate of taxation...? If it is, then we are, in some way, accepting the thing that cars or luxury products should be taxed more than non-luxury products, which is the old socialist way of thinking and taxation,” he said.

Bhargava lamented that the regulatory burden is the highest on small cars, a key segment of the Indian automobile industry and having a uniform tax structure across all segments of vehicles will not augur well for the sector growth.

He also said India’s economic growth rate could be higher if the manufacturing sector grows fast, which ‘unfortunately’ has remained a laggard.

“The burden of regulatory changes on the small cars is far higher than the regulatory burden on big cars and that is changing the whole market behaviour. People who are buying small cars are not buying small cars in near the same numbers. Personally, I think it’s not a good thing, either for the car industry or the country,” Bhargava said.

For healthy growth, there must be a steady increase in the number of new customers. The base of ownership of cars must be increasing every year, he said.