[extreme_torque]

Originally Posted by SLK

80-100%???... MODVAT/CENVAT (is Excise) is 16.48%... Roadtax is not more than 4% (in Delhi). ... VAT/Sales tax might just be 4% or so.

add to that some double taxation due to local VATs say 10%....

roughly totals upto... 35+%.... whats the rest?

obviously there must be taxes in US too!!

And the pure cost of manufacturing in India has to be less than US!

And if the component supplier to say TATA has already paid VAT on its supplies, TATA dont need to pay that again. The total taxes should not be more than 30% at the maximum and that is the total on the on-road price, not the ex-showroom price.

[raul]

So that's 30% taxes in India? What about taxes in US, does anyone have an idea about the taxes a car manufacturer will have to pay there? Then we can isolate the tax issue and try to understand other costs.

The idea is not to slam car manufacturers in India, after all we all know about the difficulties and hidden costs of operating a business here, but if they are profiteering we should know that and if they are not we should have an understanding of why cars end up costing so much more here inspite of lower costs and the limited purchasing power that is a result of lower costs.

[karthi.stark]

(Note to mods: please forgive me if a similar thread exists. I tried finding for similar threads, but couldn't find one)
Yesterday, I was going through my Economics textbook and found a chapter titled 'Globalisation and the Indian Economy'. It was about the process of globalisation and liberalisation, its positive and negative effects. While going through the chapter I kept wondering-'How has the economic liberalisation affected the Indian Automotive Market?' Though I can elaborate on it, I felt that it is the older BHPians who would know more about it than me as they have experienced these changes. Now let us see how liberalisation happened and how it has affected the Indian Automotive Scene.
It was in 1991, that some far reaching changes were made to the Economic Policy of India. The Indian government had till then placed various trade barriers and restrictions. They had done so to protect the Indian manufacturers from foreign competition. However, it felt then that time had come for Indian manufacturers to compete worldwide. As a result, it removed several trade barriers and restrictions on investment. This marked the beginning of the New Economic Policy in India.
Now, let us look at how it has changed the automotive world.

• Due to liberalisation, we now have a wider choice available in front of us to choose from. We now have various car brands like Toyota, Skoda, Honda, Mercedes, BMW and many more which provide us with a lot of attractive options unlike the olden days, where we only had Indian brands like the Hindustan Motors and Tata!
• Some Indian car manufacturers have made successful collaborations with companies from abroad. The most famous one is that of Maruti Suzuki.

• Indian Companies have been trying their level best to improve the quality of their products and also increase their productivity. These companies have invested in developing their technology and means of production. This has only been beneficial for them. For example, if people compare the Tata Hexa with the indigo, they would find a hell lot of differences. Some of them might even wonder if the Indigo was really a car manufactured by Tata!

Now let's look at the other side of the story:

• Though Indian companies have tried to improve the quality of their products, they are still far behind the foreign manufacturers when it comes to numbers. The reason is how much ever they try to improve , they enjoy very little success in this regard. Maruti is the only Indian brand which enjoys a good amount of trust from the citizens. If you have two sedans, one offered by Tata and the other by Toyota, 9 out of 10 people are bound to lean towards sedan offered by Toyota and not the Tata. If you ask them why, they would come with a variety of complaints against Tata like reliability issues, poor fitments etc.
• Another thing is that though we've a lot of options before us, there is a lack of a real choice available in front of us. Though we would be offered two cars from two different manufacturers, there is a really good chance of both of them being somewhat similar when it comes to features, i.e, they offer similar features with minimal differences.

I know this post is too small for a thread starter. But, these are all just my viewpoints. More than me, it is you fellow BHPians who are more experienced and know a lot more about the above topic than me. That's why I thought of starting a thread in which people can discuss this topic and even bring back their good old days. They can also share some amazing facts in this regard. Please add on your posts to help me expand my knowledge and also correct my mistakes if any.

[nakul0888]

I think we haven't done enough liberalization, if you ask me.
I remember studying that the Indian economy was at crisis point during the start of the 90's and this is what forced our dummy politicians to finally unshackle the economy to some degree. But there is still way more deregulation to do if we are ever going to reach first world status. Lots of sectors are still closed to foreign investment, lots of regulations and price controls still lots of high import rates still exist. Taxes are way too complicated and govt spending is too damn high.

Just imagine if we have took switzerland's approach to the economy right form 1947 instead of the soviet union's like we did, this forum would have been filled with ferraris and lambos. Sigh

[karthi.stark]

Originally Posted by nakul0888

But there is still way more deregulation to do if we are ever going to reach first world status. Lots of sectors are still closed to foreign investment, lots of regulations and price controls still lots of high import rates still exist. Taxes are way too complicated and govt spending is too damn high.

I agree with you on this sir. Though we've come a long way since liberalisation, there are still lots left to be achieved. The kind of economic growth we've desired while taking that step is still far from being achieved.

Originally Posted by nakul0888

Just imagine if we have took switzerland's approach to the economy right form 1947 instead of the soviet union's like we did, this forum would have been filled with ferraris and lambos. Sigh

This is debatable. Indian Industries had just began to develop during 1947. At this time, competition from foreign manufacturers would've been a death blow for the Indian manufacturers.I think the Indian government had done the right thing at that time by placing trade barriers and restrictions. India was one of third wave countries of the world at that time. The Indian manufacturers suffered brutally during the British Era. The government knew at that time that if they allowed foreign manufacturers to enter the Indian market, the Indian manufacturers would've collapsed resulting in our market consisting of only foreign brands and no Indian ones!

Different countries have different political, social and economic situations. I won't consider it just to compare India with Switzerland as the conditions in Switzerland were much different from what the conditions were in India at that time. Switzerland had taken that step in 1947 only as they were reasonably developed at that time. They felt that it would perfectly suit their interests.

[sgiitk]

I came across a youtube post by Mr Gurumurthy.

http://youtu.be/8HsYDpO8Ra8

It is a long speech, about 30 minutes, but comes out with some interesting stuff.

1. Why we had almost jobless growth.
2. Why demonetization became necessary.

Why the micro, and mini employment holds the key to the future.

Take it with a pinch of salt, but an excellent presentation.