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Automakers divided on tax benefits

Automakers divided on tax benefits

The automotive industry is vertically divided over a government policy that encourages production of small vehicles: lower tax on cars and SUVs measuring 4 metres or less. One side opposes the differential treatment, arguing that it would be tough to meet the upcoming crash and emission regulations while also staying within the vehicle length rules to claim the tax benefit. Manufactures on the other side who want it to continue say small cars, too, can meet any safety or emission standards.

Everyone agrees the policy has helped make India one of the largest manufactures of small cars in the world. But small cars made in India for local sales had often failed crash tests, such as conducted by UK’s Global NCAP, even as the manufactures claimed that they were made according to rules in India where the tests weren’t compulsory. In some instances made in India more than sub-four metre cars also failed the crash tests.

“… what happens in the future … with new crash regulations and new emission regulations,” asked Vikram Kirloskar, Vice-Chairman of Toyota Kirloskar Motor. In sub-four-metre vehicles, especially in diesel cars, the passenger compartment will get squeezed if they are to effectively meet the crash and emission regulations, he said. “So you lose a lot of stuff … will not be able meet these safety norms.”

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