MARUTI

June 17 (Reuters) - Maruti Suzuki India Ltd MRTI.NS:

• LAUNCHES 2025 GRAND VITARA S-CNG STARTING AT 1.3 MILLION RUPEES

Source text: ID:nBSE26DNKj

Further company coverage: MRTI.NS

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Corrects paragraph 3 to say Maruti will fit all its models with 6 airbags by the end of fiscal 2026, not April

June 11 (Reuters) - Maruti Suzuki MRTI.NS secured a five-star safety rating for its popular 'Dzire' small car, India's transport minister said on Wednesday, marking a milestone for the country's largest carmaker that has for long lagged its rivals in safety.

Its upgraded 'Dzire' model, launched in November, secured the highest rating of five stars under India's local safety standard, Bharat New Car Assessment Program (NCAP), the first such Maruti model to hit the milestone.

As part of its efforts to catch up to local rivals, Maruti has said it would fit all its cars with six airbags by the end of fiscal 2026, as Indian buyers seek safer options.

Smaller rivals Tata Motors TAMO.NS and Mahindra MAHM.NS already have several Bharat NCAP five-star rated cars in their lineup.

"It's heartening to witness mainstream models setting new benchmarks in vehicle safety," India's Transport Minister Nitin Gadkari said in a post on X.

(Reporting by Nandan Mandayam in Bengaluru; Editing by Leroy Leo)

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By Aditi Shah

NEW DELHI, June 10 (Reuters) - Maruti Suzuki MRTI.NS has cut near-term production targets for its maiden electric vehicle e-Vitara by two-thirds because of rare earths shortages, a document showed, in the latest sign of disruption to the auto industry from China's export curbs.

India's top carmaker, which said on Monday it had not seen any impact yet from the supply crisis, now plans to make about 8,200 e-Vitaras between April and September, versus an original goal of 26,500, according to a company document seen by Reuters.

It cited "supply constraints" in rare earth materials that are vital in making magnets and other components across a range of hi-tech industries.

Maruti still plans to meet its output target of 67,000 EVs for the year ending March 2026 by ramping up production in subsequent months, the document said.

China's curbs on some rare earth exports have rocked the global auto industry, with companies warning of severe supply chain disruptions. While some companies in the United States, Europe and Japan are seeing supplies easing as they secure licences from Beijing, India is still waiting for China's approval amid fears of production stoppages.

Launched amid much fanfare at India's car show in January, the e-Vitara is crucial to Maruti's EV push in the country, marking its entry in a segment that Prime Minister Narendra Modi's government wants to grow to 30% of all car sales by 2030 from about 2.5% last year.

The setback could also hurt parent Suzuki Motor 7269.T, for which India is the biggest market by revenue and a global production hub for EVs. The bulk of the made-in-India e-Vitaras are earmarked for export by Suzuki to its major markets like Europe and Japan around summer 2025.

Maruti told reporters last week the rare earths issue had no "material impact" on the e-Vitara's launch timeline. Chair RC Bhargava said there was "no impact at the moment" on production, local media reported on Monday.

Maruti and Suzuki did not immediately respond to requests for comment on Tuesday.

Maruti is yet to open bookings for the e-Vitara with some analysts warning it is already late to launch EVs in the world's third-largest car market where Tesla is also expected to begin sales this year.

Under its previous plan "A", Maruti was to produce 26,512 e-Vitaras between April and September - the first half of the fiscal year. Under the revised plan "B", it will manufacture 8,221, the document showed, indicating a two-thirds cut in its production schedule.

However, in the second half of the financial year - between October and March 2026 - Maruti plans to ramp up production to 58,728 e-Vitaras, or about 440 per day at its peak, versus a previous target of 40,437 for those six months under plan A.

Two supply chain sources confirmed Maruti's plan to scale back e-Vitara production because of rare earth magnet shortages but were not privy to the exact numbers.

The rare earths crisis comes as Maruti is already grappling to recover market share lost to Tata Motors TAMO.NS and Mahindra & Mahindra's MAHM.NS feature-rich SUVs. These companies also lead India's EV sales. Maruti's share of India's passenger vehicle market is down to 41% from a recent peak of about 51% in March 2020.

Suzuki has trimmed its sales target for India to 2.5 million vehicles by March 2031 from 3 million previously, and scaled back its lineup of EV launches to just four, instead of the six planned before, as competition in the South Asian nation intensifies.

(Reporting by Aditi Shah
Editing by Mark Potter)

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By Aditi Shah

NEW DELHI, June 2 (Reuters) - Maruti Suzuki MRTI.NS, India's top carmaker, said on Monday there is no immediate impact on its car production from China's export curbs on rare earth magnets, a key component in electric and gasoline cars.

Indian car and component manufacturers told Prime Minister Narendra Modi's officials last week that auto production could grind to a halt within days due to Chinese export restrictions on rare earth magnets, Reuters reported.

The companies want the government to lobby Beijing to relax the curbs.

(Reporting by Aditi Shah; Editing by Tom Hogue)

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By Aditi Shah

NEW DELHI, May 30 (Reuters) - India's biggest automakers are seeking to block a pollution management body's attempts to promote hybrid vehicles in government fleets in and around New Delhi, saying it will disrupt adoption of cleaner battery electric cars and hit investments, documents show.

Companies, including Mahindra & Mahindra MAHM.NS and Tata Motors TAMO.NS, are lobbying the ministry of heavy industries to overturn an attempt to equate hybrids with EVs and ensure incentives for all government programmes are restricted to electric models, five company letters seen by Reuters show.

In a May 2 advisory, the Commission for Air Quality Management, tasked with fixing severe air pollution levels in India's capital region, categorised strong hybrids as "cleaner vehicles" recommending their use in government fleets, a move that caught carmakers by surprise.

Given the "ultra-high density" of vehicular traffic in New Delhi and nearby areas, there is a need to move away from "polluting vehicles, dependent purely on fossil fuels like diesel and petrol", the commission said.

Automakers, however, argue that hybrids - which use a battery and combustion engine - are reliant on fossil fuels whereas EVs produce zero tailpipe emissions, making them an effective solution for the urban air pollution crisis.

"Our plea is for government policy and incentives to stay firmly focused only on EVs," Mahindra said in its May 15 letter to the heavy industries ministry.

Along with Tata and Mahindra, JSW MG Motor, Hyundai Motor and Kia Corp have also written to the ministry in support of electric cars, rekindling their face-off with hybrid proponents like Toyota Motor 7203.T and Maruti Suzuki MRTI.NS.

Tata, Mahindra, JSW MG Motor, Hyundai 005380.KS, HYUN.NS, Kia Corp 000270.KS and the ministry of heavy industries did not respond to requests for comment.

POLICY UNCERTAINTY

The potential opportunity is huge - of the 847,544 vehicles in use by government agencies across India in 2022, only 5,384 were EVs - less than 1%, official data showed.

A major concern for EV makers is that support for hybrids dilutes the Indian government's own policy which incentivises only EVs in its production-linked schemes and other programmes.

It will also create confusion among car buyers, companies and investors, hurting EV sales at a time when their growth is already slowing due to inadequate charging infrastructure and high upfront vehicle costs.

"The lack of a consistent and predictable policy environment may deter long-term investors ... particularly in high-capex, technology-intensive sectors like EV," said Tata, which has raised $1 billion from private equity firm TPG TPG.O for its EV push.

Tata in its May 15 letter said, the commission's move will undermine current and proposed EV investments, impact India's global image as an investor friendly destination and send mixed signals to international stakeholders.

Carmakers in India are expected to invest over $10 billion through 2030 to manufacture lithium-ion cells, EVs and batteries, ratings agency Moody's said in a report, adding EV adoption rates in India are still low versus China, Europe and the U.S.

Mahindra's EV unit counts Singapore's Temasek and British International Investment among investors while Hyundai plans to invest over $500 million in EVs in India.

(Reporting by Aditi Shah; editing by David Evans)

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Repeats May 28 story with no changes to text

By Aditi Shah

NEW DELHI, May 28 (Reuters) - Indian auto production could grind to a halt within days due to Chinese export restrictions on rare earth magnets, according to company executives and documents from industry groups, which want the government to lobby Beijing to relax the curbs.

China, which controls over 90% of global processing capacity for the magnets used for automobiles, clean energy and home appliances, enacted restrictions in April requiring companies to obtain import permits from Beijing.

Though a response to U.S. President Donald Trump's tariffs, the export curbs will impact automakers globally. And Indian companies say a disruption in the world's third-largest car market is imminent due to rapidly depleting stocks and the onerous process of obtaining new supplies.

In a meeting with commerce ministry officials last week, the Society of Indian Automobile Manufacturers (SIAM), an industry group, said inventories at auto part makers are expected to run out by the end of May, according to an unreleased document seen by Reuters.

SIAM was seeking the intervention of Prime Minister Narendra Modi's government to help access magnets held at Chinese ports since April 4.

"Starting end May or early June, auto industry production is expected to come to a grinding halt," SIAM said in the document, which was presented during a May 19 meeting attended by executives from Maruti Suzuki, Mahindra & Mahindra and Tata Motors.

While China has cleared exports from some magnet producers, including Volkswagen VOWG.DE suppliers, three auto industry executives told Reuters they fear strained relations between Beijing and New Delhi could hurt India's chances of getting quick approvals.

The company officials asked not to be identified due to the sensitivity of the issue.

When asked about the magnet restrictions' impact in India, China's embassy in New Delhi said it was "actively facilitating and streamlining compliant trade" in accordance with legal and regulatory requirements.

"China's lawful imposition of export controls on these items aims to better safeguard national security and interests," it said in a statement.

Mahindra MAHM.NS, Maruti MRTI.NS, Tata TAMO.NS, SIAM and India's commerce and external affairs ministries did not respond to requests for comment. Neither did the Auto Component Manufacturers Association of India (ACMA), which also attended the meeting.

PERMIT HEADACHES

While rare earth magnets are a crucial component in electric vehicle motors, they are also required for parts like power windows and audio speakers used in traditional cars.

And though the measures imposed by Beijing are meant to focus on high-performance exports, shipments of low-end magnets are also being held up at ports due to confusion around implementing the restrictions.

China's exports of permanent magnets fell 51% year on year to 2,626 tons in April, the first month of data following the curbs, customs data shows.

India's auto sector imported 460 tons of rare earth magnets, mostly from China, in the fiscal year ended March 31 and expects to import 700 tons worth $30 million this year, according to industry estimates.

"Though the cost of imported rare earth magnets is miniscule in vehicles, risk is vehicles cannot be manufactured even if we are short of one component," SIAM and ACMA said in a separate document submitted to the Indian government.

Indian companies are worried by the complexity of an import process that requires approvals from Indian ministries and documents including so-called "end-use certificates" stating the magnets are not for military purposes, the SIAM document said.

Those documents must be verified by the Chinese embassy in New Delhi and sent to companies' Chinese suppliers whereafter Beijing issues a licence, it added.

India should endorse applications from importers "within hours", the SIAM document said, and push the Chinese embassy and commerce ministry to approve them "on an urgent basis".

(Reporting by Aditi Shah; Editing by Joe Bavier)

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** Maruti Suzuki India MRTI.NS jumps nearly 4% to one-month high of 12,727 rupees

** Stock biggest gainer on Nifty auto index .NSEI, which is up 1.5%

** Co reports around 7% jump in April sales, with both domestic sales and exports increasing from last year

** "Product mix marginally improved with UV (utility vehicle) share in total sales volume pegged at ~33% vs 32% in the previous month," says ICICI Direct Research

** Stock set for biggest one-day pct gain in three months

** YTD, MRTI up 17.2% vs 0.6% losses in Nifty Auto index .NIFTYAUTO

(Reporting by Vivek Kumar M)

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May 1 (Reuters) - Three of India's top four carmakers reported weak sales to dealers in April, company data showed on Thursday, as buyers delayed purchases amid concerns about slowing economic growth.

Market leader Maruti Suzuki MRTI.NS posted a marginal 0.6% year-on-year rise, while Hyundai Motor India HYUN.NS and Tata Motors TAMO.NS clocked declines of 11.6% and 5.1%, respectively.

Mahindra & Mahindra MAHM.NS, in contrast, reported a near 28% jump in monthly sales, aided by strong demand for its 'XUV 3X0' and five-door 'Thar' SUVs.

That helped the 'Scorpio' maker overtake Hyundai and Tata Motors to the no. 2 spot in India's car market for the second time this year.

The four automakers together account for 80% of a market that saw record sales of 4.3 million units last year. Their combined sales were up about 1.4% in April, led largely by Mahindra.

WHY IT MATTERS

India's auto sector makes up 7% of GDP and is a major employer.

The country's economic growth is seen slowing down, with the central bank projecting full-year GDP growth of 6.5% for fiscal 2025, lower than the 9.2% recorded the year before.

KEY CONTEXT

Car sales are cooling as the post-pandemic pent-up demand, which propelled sales to record highs in past years, has faded. Growth slowed to 2% in financial year 2025, from 8% the previous year and 27% in fiscal 2023, with industry experts attributing the moderation to a broader economic slowdown.

Manufacturers expect car sales to grow 1%-2% this year, although some analysts expect growth to pick up by June or September on lower interest rates and a cut in personal income tax.

Phillip Capital said that buyers were postponing purchases, with the trend likely to continue for up to four months.

Maruti has held up better due to SUV demand and fleet sales, while Hyundai and Tata have struggled amid fewer new launches as they derive two-thirds of their sales from SUVs.

BY THE NUMBERS

(Reporting by Nandan Mandayam in Bengaluru; Editing by Sonia Cheema)

(([email protected]; Mobile: +91 9591011727;))

** Shares of Maruti Suzuki India MRTI.NS rise 1.1% to 11,831.00 rupees

** Jefferies ("Buy"; trims PT to 13,600 rupees) lowers FY26-27 EBITDA margin estimates by 1 percentage point to 11.5% on limited pricing power amid weak demand, competitive pressures

** Also cuts MRTI's FY26-27 EPS estimations by 6-8%, mainly factoring in lower margins

** MRTI's Q4 profit unexpectedly fell 4.3%, compared to analysts' expectation of flat earnings

** Kotak ("Add"; trims PT to 12,275 rupees) says elevated costs for new Kharkhoda plant, higher safety costs for fitting all cars with six airbags will lead to 20 bps decline in FY26 EBITDA margin

** J.P.Morgan ("neutral"; PT unchanged at 12,800 rupees) cuts FY26 EBIT margin estimate by 80 bps to 9.1% on slowing domestic demand for cars

** Analysts on average rate MRTI "buy", same as smaller listed rivals - data compiled by LSEG

** MRTI up ~9% YTD

($1 = 85.2075 Indian rupees)

(Reporting by Vijay Malkar)

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Rewrites throughout with exec comments, forecast from earnings call

By Meenakshi Maidas and Nandan Mandayam

April 25 (Reuters) - India's top carmaker Maruti Suzuki MRTI.NS plans to invest up to 90 billion rupees ($1 billion) in the current fiscal year, it said on Friday, as it gears up to launch its first electric vehicle, boost exports and expand its existing car plant.

Maruti, majority-owned by Japan's Suzuki Motor 7269.T, will begin production of its first-ever electric vehicle, the 'e-Vitara', before September-end, Chairman R.C. Bhargava said in an earnings call.

"I think the annual production... will be somewhere near 70,000 electric vehicles, the bulk of which will be exported," Bhargava said, adding that it wants to be India's top producer of EVs this year with plans to export it to Japan and Europe.

With the 'e-Vitara,' Maruti seeks to enter a segment dominated by rival Tata Motors TAMO.NS. EVs formed just 2.5% of India's 4.3 million car sales last fiscal year but the government wants to grow this to 30% by 2030 and is offering incentives to carmakers to build them locally.

The company is already India's biggest exporter of cars, and the e-Vitara key will be key to further boost its overseas shipments, which it plans to grow by 20% in the current fiscal year.

Exports are turning increasingly important for Maruti at a time when domestic sales momentum in the world's third-largest car market is stalling, and the carmaker plans to continue with expansion plans at its factory in northern India.

India's car sales by manufacturers to dealers grew at a slower pace for a second straight year in fiscal 2025, and manufacturers expect sales for the current year to grow by just 1%-2%.

Later this year, Maruti will launch a new combustion engine SUV, Bhargava said, as the company looks to win back market share lost to smaller rivals who were quicker to capture Indians' rising affinity towards SUVs.

Maruti will also fit all its cars with six airbags, he said, amid a bigger push towards safety.

Bhargava said the company would remain unaffected by tariffs imposed by U.S. President Donald Trump's administration as it does not export its cars to the country.

Earlier in the day, Maruti reported a surprise fall in fourth-quarter profit as higher discounts and expenses weighed on earnings. Its shares closed about 2% lower.

(Reporting by Meenakshi Maidas and Nandan Mandayam in Bengaluru; Editing by Janane Venkatraman, Varun H K and Leroy Leo)

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By Aditi Shah

NEW DELHI, April 24 (Reuters) - India's capital New Delhi plans to limit gasoline and diesel-powered cars a family can buy as well as ban sales of fuel-guzzling motorbikes and scooters, according to a draft policy aimed at cleaning up one of the world's most polluted cities.

The measures represent one of the most drastic steps the city has lined up to tackle pollution, which often forces local authorities to ban some construction, shut schools and disrupt flights in the city of more than 30 million people during the winter season.

Under Delhi's new electric vehicle policy, the city government will also waive some local taxes on the purchase of hybrids, putting them on par with concessions given to EVs, while imposing a new levy of 0.5 rupees ($0.0059) on every litre of petrol sales, according to the 74-page draft seen by Reuters.

The primary objective "is to unlock the next phase of EV adoption, reduce air pollution and contribute to India's energy independence and net-zero targets," the draft stated.

Every year ahead of the onset of winter in Delhi, calm winds and low temperatures trap pollutants from sources including vehicles, industries and crop residue burning in nearby fields, raising the level of harmful toxins in the air.

Delhi launched the first phase of its EV policy in 2020 which helped boost the share of electric models to 12% of all new vehicle sales, including motorbikes and cars, in 2024.

Under the second phase, the policy document says, no new sales of gasoline, diesel and gas-based two-wheelers will be allowed from April 1, 2027. It is also providing a cash incentive of up to $350 on the purchase of electric bikes and scooters.

Officials at Delhi's transport ministry and the chief minister's office did not immediately respond to an email seeking comment.

LIFELINE FOR RESIDENTS

Two-wheelers are a lifeline for millions of Delhi residents, and the move could significantly impact Delhi's lower- and middle-income groups who depend on them, and not cars, to navigate the city's often congested roads.

In 2024, nearly 450,000 new two-wheeler scooters and motorbikes were sold in Delhi. There were 8 million vehicles on Delhi's roads in 2022-23, of which 67% were two-wheelers, according to central government figures.

A ban on the sale of fossil fuel two-wheelers from 2027 will hurt manufacturers such as Bajaj Motors BAJA.NS, TVS TVSM.NS and Hero MotoCorp HROM.NS, although some of the negative impact may be offset by increased sales of their electric two-wheelers.

And in a move aimed at the more affluent population, the policy is also set to limit the number of fossil fuel cars each household can purchase to two, as it aims for a 30% EV penetration by 2030, from around 2.7% last year.

"All private car owners in Delhi will be required to purchase only electric cars if they intend to own (a) third or subsequent car registered to the same residential address," the document stated.

The policy, which is expected to cost the Delhi government 28.6 billion rupees, is subject to change based on feedback from car makers and other stakeholders. It was not immediately clear when the policy will be finalised or how it will be funded.

The city government is also planning some tax waivers for hybrid vehicles to match the concessions to those given for EVs, potentially lowering their cost by up to 15%.

The move is in line with a similar move made by neighbouring state Uttar Pradesh. They are considered a win for the likes of Toyota Motor 7203.T and Maruti Suzuki MRTI.NS, but a setback for homegrown Tata Motors TAMO.NS and Mahindra & Mahindra MAHM.NS who focus on EVs.

($1 = 85.3350 Indian rupees)

(Reporting by Aditi Shah; Editing by Muralikumar Anantharaman)

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April 15 (Reuters) - Indian carmakers' sales to dealers grew 2% in financial year 2025, as steady demand for larger sport utility vehicles made up for weaker sales of small cars and sedans, industry data showed on Tuesday.

Carmakers sold a record 4.3 million units in the world's third-largest car market, according to the Society of Indian Automobile Manufacturers (SIAM), but the growth was at least a four-year low.

Since rising by 12% in fiscal year 2022 and 27% in 2023 to what was then a new record, India's domestic car sales growth has moderated, rising 8% in 2024 and 2% in 2025.

India's financial year runs from April through March.

The manufacturers in February estimated the industry would grow 1% to 2% in the current fiscal year, but analysts have called the forecasts conservative.

Carmakers have had to offer higher discounts for longer to prop up demand, as pent-up demand that had led growth in previous years fizzled out, analysts and industry insiders have said.

SIAM said it expects domestic demand to be boosted by successive rate cuts by India's central bank, as well as a cut in personal income tax announced earlier this year.

(Reporting by Nandan Mandayam in Bengaluru; Editing by Varun H K)

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April 8 (Reuters) - Maruti Suzuki India Ltd MRTI.NS:

• MARUTI SUZUKI INDIA LTD - LAUNCHES UPDATED GRAND VITARA AT 1.1 MILLION RUPEES

Source text: ID:nBSEJ43wG

Further company coverage: MRTI.NS

(([email protected];;))

By Aditi Shah and Shivangi Acharya

NEW DELHI, April 7 (Reuters) - The European Union wants India to eliminate tariffs on car imports under a long-pending trade deal and Prime Minister Narendra Modi's government is willing to sweeten its current proposal to seal the talks, sources told Reuters.

India is open to the phased reduction of tariffs to 10% from more than 100%, two industry sources and a government official said. That is despite industry lobbying for India to retain at least a 30% tariff even if it starts reducing the levy, and also not tinker with import duties on EVs for four more years to protect domestic players.

The EU's demands come weeks after U.S. President Donald Trump's administration sought a similar elimination of import duties on cars, including EVs, as part of bilateral trade talks with India, piling pressure on domestic carmakers.

Tariff cuts will be a victory for European carmakers such as Volkswagen VOWG.DE, Mercedes-Benz MBGn.DE and BMW BMWG.DE, widening their access to India. It could also be a win for Elon Musk's Tesla TSLA.O which will begin sales of imported EVs in India this year probably from its Berlin plant.

"EU has come back asking for a better deal and India wants to make a better offer," said one of the industry sources.

India's commerce ministry conveyed the EU's demands and India's stance to officials from the heavy industries ministry and auto industry representatives in a meeting last week, the three sources said.

The sources, who have knowledge of the talks, spoke on condition of anonymity because the negotiations are ongoing and private.

The European Commission declined to comment on specifics but shared a readout of its last round of talks with India in March.

"For many of the key areas, the EU and India have different approaches, objectives ... This translates, in some cases, in different levels of ambition," Olof Gill, commission spokesperson for trade said in a statement.

India's commerce ministry and the Society of Indian Automobile Manufacturers (SIAM), which represents major carmakers on the world's third-largest car market, did not respond to emails seeking comment.

HEAVILY PROTECTED MARKET

India's 4 million-unit-a-year car market is one of the most protected in the world and domestic carmakers have argued sharp tariff cuts would wipe out investment in local manufacturing by making imports cheaper.

Companies such as Tata Motors TAMO.NS and Mahindra & Mahindra MAHM.NS have especially lobbied against lowering import tariffs on EVs, saying it would hurt a sector in which they have invested heavily and in which they plan to pump more money.

Similar to its proposal to the U.S., India's auto industry has proposed an immediate reduction of tariffs on a limited number of petrol cars to 70% from more than 100% and then carrying out cuts in phases to 30%. On EVs, carmakers want no tariff cuts until 2029 followed by a phased reduction on limited imports to 30%, the sources said.

While it was not immediately clear if India had already made its 10% tariff offer to the EU, analysts expect both sides to be more flexible in negotiations given the threat of a global trade war and recessionary impact of Trump's hefty tariff increases.

India and the EU have been in trade talks for several years and in February agreed to conclude the deal by the end of the year as they look to soften the impact of tariffs.

António Costa, president of the European Council, said last week on social media platform X that it was time to "decisively advance in negotiations with India".

"If the EU is now feeling pressure to strike a deal with India we need to see how we can capitalise on that. It's all about leverage," said the first industry source.

(Reporting by Aditi Shah and Shivangi Acharya in New Delhi; Editing by Kate Mayberry)

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By Aditi Shah, Shivangi Acharya and Aftab Ahmed

NEW DELHI, April 2 (Reuters) - India plans to lower import tariffs on electric cars, rejecting requests from local automakers to delay such cuts by four years, as New Delhi prioritises closing a trade deal with the United States, government and industry sources told Reuters.

The automakers are lobbying Prime Minister Narendra Modi's government to delay any cut in EV tariffs until 2029, and then phase in a reduction to 30% from as high as roughly 100%, two industry sources and one government official said.

However, New Delhi is serious about lowering EV tariffs - which have riled U.S. President Donald Trump and his ally Tesla TSLA.O CEO Elon Musk - and the sector is set to be part of the first tranche of tariff reductions in a planned bilateral trade deal, this government official - and another - said.

"We have protected the auto industry for far too long. We will have to open it up," the second government official said, adding the plan was to lower tariffs "significantly", including on EVs.

The officials declined to disclose the size of the planned duty cut given ongoing negotiations with Washington.

The sources, who are familiar with the talks and the auto industry's demands, declined to be named as they are not authorised to speak to the media.

India's commerce ministry and the Society of Indian Automobile Manufacturers, which represents carmakers in the world's third-largest auto market, did not immediately respond to emails seeking comment.

New Delhi's plan to cut duties on EVs and other goods comes as it seeks to build bridges with Trump - who has referred to India as a "tariff king" - even as he prepares to announce reciprocal tariffs on trading partners later on Wednesday.

An immediate cut would be a victory for Tesla, which has finalised showrooms in Mumbai and New Delhi to begin selling imported cars in the South Asian nation this year. Trump has said it is currently "impossible" for Tesla to sell in India and it would be unfair if it had to build a factory there.

But it would be a setback for domestic players like Tata Motors TAMO.NS and Mahindra & Mahindra MAHM.NS, which have invested millions of dollars in local EV manufacturing, with more to come, and lobbied against duty cuts.

Automakers fear any agreement with the U.S. would set a precedent for ongoing trade talks with the European Union and Britain, intensifying competition in India's small but fast growing EV sector, three of the sources said.

India's EV sales, dominated by Tata Motors, accounted for just 2.5% of total car sales of 4.3 million in 2024, and the government wants to increase this to 30% by 2030.

Carmakers are open to some immediate duty cut on gasoline models, followed by a phased reduction to 30%, but say their EV investment is tied to New Delhi's incentive programme for local manufacturing that runs until 2029, and allowing cheaper imports before then would hurt their competitiveness, the sources added.

"They are not so rigid on ICE (internal combustion engine vehicles) but have sought careful consideration for EV duties given early investment commitments," the first government source said.

(Reporting by Aditi Shah, Shivangi Acharya and Aftab Ahmed. Additional reporting by Aditya Kalra in New Delhi. Editing by Mark Potter)

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April 1 (Reuters) - Maruti Suzuki India Ltd MRTI.NS:

• MARUTI SUZUKI INDIA LTD - SELLS 192,984 UNITS IN MARCH 2025

Source text: ID:nBSE3cqkFL

Further company coverage: MRTI.NS

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March 26 (Reuters) - India's top carmaker Maruti Suzuki MRTI.NS will invest 74.1 billion rupees (nearly $864 million) to set up a third manufacturing plant in the northern state of Haryana, it said on Wednesday.

The new plant will take the capacity in the region to 750,000 units per year by 2029, the carmaker said.

Maruti has two plants at Kharkhoda in Haryana -- one of which is operational and manufactures 250,000 vehicles a year, while another, which is set to have the same capacity, is under construction.

($1 = 85.7675 Indian rupees)

(Reporting by Ananta Agarwal in Bengaluru; Editing by Mrigank Dhaniwala)

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March 21 (Reuters) - Mahindra and Mahindra MAHM.NS will increase prices of its SUVs and other commercial vehicles by up to 3% from April, the company said on Friday, becoming the latest Indian carmaker to raise prices to combat rising costs.

Already, market leader Maruti Suzuki MRTI.NS, Tata Motors TAMO.NS and Hyundai Motor India HYUN.NS have said they will hike prices between 2% and 4% from next month.

These higher expenses are due to rising commodity prices, elevated import duties on raw materials and supply chain disruptions.

Mahindra and Mahindra said its price increases will vary depending on the model of the vehicle.

(Reporting by Ananta Agarwal in Bengaluru; Editing by Savio D'Souza)

(([email protected];))

March 19 (Reuters) - Maruti Suzuki India Ltd MRTI.NS:

• MARUTI SUZUKI INDIA LTD - RECEIVES ORDER-IN-ORIGINAL FROM CUSTOMS COMMISSIONER

• MARUTI SUZUKI INDIA -ASKED TO PAY 38.14 RUPEES MILLION DUTY, 2.50 RUPEES MILLION FINE

Source text: ID:nBSEc6TtBM

Further company coverage: MRTI.NS

(([email protected];))

March 17 (Reuters) - Maruti Suzuki India Ltd MRTI.NS:

• MARUTI SUZUKI - TO INCREASE PRICES OF CARS FROM APRIL, 2025

• MARUTI SUZUKI - PRICE INCREASE IS EXPECTED TO BE UP TO 4%

• MARUTI SUZUKI - PRICE INCREASE WILL VARY DEPENDING ON MODEL

Source text: ID:nBSE712Cj9

Further company coverage: MRTI.NS

(([email protected];))

March 13 (Reuters) - Ashok Leyland Ltd ASOK.NS:

• INDIA'S FEB 2-WHEELER SALES 13,84,605 UNITS - INDUSTRY BODY

• INDIA'S FEB 3-WHEELER SALES 57,788 UNITS - INDUSTRY BODY

• INDIA'S FEB TOTAL DOMESTIC PASSENGER VEHICLE SALES 3,77,689 UNITS - INDUSTRY BODY

• INDIA AUTO INDUSTRY BODY: UPCOMING FESTIVITIES OF HOLI, UGADI IN MARCH LIKELY TO CONTINUE TO DRIVE DEMAND

Further company coverage: ASOK.NS

(([email protected];))

Feb 25 (Reuters) - Maruti Suzuki India Ltd MRTI.NS:

• COMMISSIONS PHASE I OF KHARKHODA FACILITY

• COMMENCES COMMERCIAL PRODUCTION AT KHARKHODA FACILITY

• COMMISSIONED PHASE I OF MANUFACTURING FACILITY WITH CAPACITY OF 250,000 UNITS PER ANNUM

Source text: ID:nBSE8ZCJjQ

Further company coverage: MRTI.NS

(([email protected];;))

Repeats for Indian morning readership, no change to text.

By Aditi Shah

NEW DELHI, Feb 21 (Reuters) - India's EV policy, which offers import tax cuts for foreign automakers investing in the country, will restrict them from using funds spent on charging infrastructure for such relief, increasing their car manufacturing, a government document shows.

India last year announced a policy aimed at attracting Tesla TSLA.O to manufacture EVs in the country and let such foreign carmakers import cars at a 15% tariff, from around 100% now, but only if they invest at least $500 million for a factory.

But the policy will mandate that automakers can count only 5% of their total EV investment as coming from creation of charging infrastructure, even if they spend much more on the power network, according to government document detailing draft rules which is not public but was seen by Reuters.

The government's plan comes just as Tesla gets closer to entering India with imported cars, having finalised two locations for showrooms. The restriction could upset those automakers who may want to invest a bigger chunk of their planned India investments into creating charging networks, which remain far and few in India.

An industry source privy to discussions with the government said the call is being taken as New Delhi wants companies to prioritise manufacturing, and not just charging networks.

In India's nascent EV market, many buyers have shied away from making purchases due to lack of fast chargers.

"Expenditure incurred on charging infrastructure would be considered up to (a) maximum 5% of the committed investment," the 47-page draft document from January 2025 stated.

The government is holding consultations with carmakers and other stakeholders on the draft rules and will finalise them by next month, said a source with direct knowledge of the matter.

India's ministry of heavy industries, which is spearheading the new policy, did not respond to an email seeking comment.

Tesla in a job advert last week said it is also looking for a "charging developer" who would "develop and manage pipeline of new charging" sites, and select locations for deployment.

The EV giant's chief Elon Musk put on hold his manufacturing investment plans for India last year, amid falling electric car sales globally.

Tesla's immediate India plan is to import cars and sell them in India. Musk and U.S. President Donald Trump however have repeatedly said India's tariffs for cars are too high.

The new draft rules said companies which commit to India manufacturing will also need to meet a minimum turnover of $577 million by the end of the fourth year of operation, and $866 million by the fifth year, to be eligible for lower tariffs on up to 8,000 electric cars per year.

If they fail to do so, they will need to pay a penalty of between 1%-3% of the revenue shortfall.

Other foreign automakers like Hyundai 005380.KS, HYUN.NS and Toyota Motor 7203.T have shown interest in making EVs in India at their existing and new factories.

(Reporting by Aditi Shah; editing by David Evans)

(([email protected]; +91-11-4954 8023, +91-11-3015 8023; Reuters Messaging: twitter: @aditishahsays))

By Aditi Shah

NEW DELHI, Feb 21 (Reuters) - India's EV policy, which offers import tax cuts for foreign automakers investing in the country, will restrict them from using funds spent on charging infrastructure for such relief, increasing their car manufacturing, a government document shows.

India last year announced a policy aimed at attracting Tesla TSLA.O to manufacture EVs in the country and let such foreign carmakers import cars at a 15% tariff, from around 100% now, but only if they invest at least $500 million for a factory.

But the policy will mandate that automakers can count only 5% of their total EV investment as coming from creation of charging infrastructure, even if they spend much more on the power network, according to government document detailing draft rules which is not public but was seen by Reuters.

The government's plan comes just as Tesla gets closer to entering India with imported cars, having finalised two locations for showrooms. The restriction could upset those automakers who may want to invest a bigger chunk of their planned India investments into creating charging networks, which remain far and few in India.

An industry source privy to discussions with the government said the call is being taken as New Delhi wants companies to prioritise manufacturing, and not just charging networks.

In India's nascent EV market, many buyers have shied away from making purchases due to lack of fast chargers.

"Expenditure incurred on charging infrastructure would be considered up to (a) maximum 5% of the committed investment," the 47-page draft document from January 2025 stated.

The government is holding consultations with carmakers and other stakeholders on the draft rules and will finalise them by next month, said a source with direct knowledge of the matter.

India's ministry of heavy industries, which is spearheading the new policy, did not respond to an email seeking comment.

Tesla in a job advert last week said it is also looking for a "charging developer" who would "develop and manage pipeline of new charging" sites, and select locations for deployment.

The EV giant's chief Elon Musk put on hold his manufacturing investment plans for India last year, amid falling electric car sales globally.

Tesla's immediate India plan is to import cars and sell them in India. Musk and U.S. President Donald Trump however have repeatedly said India's tariffs for cars are too high.

The new draft rules said companies which commit to India manufacturing will also need to meet a minimum turnover of $577 million by the end of the fourth year of operation, and $866 million by the fifth year, to be eligible for lower tariffs on up to 8,000 electric cars per year.

If they fail to do so, they will need to pay a penalty of between 1%-3% of the revenue shortfall.

Other foreign automakers like Hyundai 005380.KS, HYUN.NS and Toyota Motor 7203.T have shown interest in making EVs in India at their existing and new factories.

(Reporting by Aditi Shah; editing by David Evans)

(([email protected]; +91-11-4954 8023, +91-11-3015 8023; Reuters Messaging: twitter: @aditishahsays))

** Shares of carmaker Maruti Suzuki India MRTI.NS fall as much as 2.3% to 12,395 rupees, set for worst day since October 29 2024

** MRTI top percentage loser on both Nifty 50 index .NSEI and Nifty auto index .NIFTYAUTO

** Parent Suzuki Motor 7269.T said it expects to launch 4 battery electric vehicles (EV) in India by fiscal 2030, scaling back a previous goal of rolling out six nL2N3PB028

** Adds, co aims for 50% market share as market leader in Indian automobile industry from the current ~40%

** Analysts' mean rating on stock is 'buy', same as rivals Tata Motors TAMO.NS, Mahindra and Mahindra MAHM.NS and Hyundai Motor India HYUN.NS; MRTI's median PT is 14,024 rupees - data compiled by LSEG

** MRTI rises 16.8% YTD, compared to 4.2% fall in Nifty auto index

(Reporting by Meenakshi Maidas in Bengaluru)

(([email protected];))

This is a repeat of an item issued on Wednesday

By Aditya Kalra, Aditi Shah and Nikunj Ohri

NEW DELHI, Feb 12 (Reuters) - India's demand for back taxes running into a record $1.4 billion from Volkswagen, after 12 years of scrutiny, is reigniting concerns that lengthy investigations and litigation could sour the plans of foreign firms in the fastest-growing major economy.

Automakers such as Maruti Suzuki MRTI.NS, Hyundai 005380.KS, Honda 7267.T and Toyota 7203.T face demands for about $6 billion collectively in disputes on income-tax, customs and other payments that go back years, a Reuters analysis shows.

Although Prime Minister Narendra Modi has been courting foreign investors with promises to simplify regulations and uproot bureaucratic hurdles, lengthy tax investigations remain a sore point, often triggering lawsuits that stretch over years.

In one high-profile incident, telecoms company Vodafone won its case against a $2-billion retrospective Indian tax demand after more than a decade of legal battles with New Delhi, including international arbitration at the Hague.

Now, Volkswagen's move on January 29 to sue India for $1.4 billion in tax that the firm called "impossibly enormous" is making foreign companies jittery.

Tax advisers and lawyers say they are fielding nervous queries from clients about how years-old tax cases could come back to haunt them.

Calls are also growing for an amnesty scheme for cases running for years, as India set a three-year window on February 1 to conclude reviews of customs shipments, but the rule excludes old disputes running into billions of dollars.

"The government clearly recognised this now and redressed it, but it is unlikely old tax demand notices will be given any benefit," said Ameya Dadhich, a tax associate at global law firm DLA Piper.

"Such instances can deter foreign companies from investing heavily in India," he added. "An amnesty scheme will be helpful given that around 40,000 tariff disputes are pending."

India's finance ministry did not respond to queries from Reuters.

Modi wants to turn India into a manufacturing hub, but many electronic and auto companies rely on assembly operations using parts for high-end cars or smartphones imported from markets such as China and Europe, often spurring investigations.

Government data shows total pending arrears of service tax, customs and excise levies stood at nearly $53 billion in November 2024, with a whopping 70% disputed in litigation.

In the category of import tariff, or customs disputes alone, India had made tax demands of $4.5 billion by March 2024, with a third of those pending for more than five years.

One tax adviser and a lawyer for a foreign automaker in India said the Volkswagen news sparked a flurry of calls from companies to gather updates on scrutiny of their shipments, to ensure their imports are classified correctly for tax.

TAX BACKLOG

In a move seen as aimed at placating U.S. President Donald Trump, who once called India a "tariff king", New Delhi cut average tariffs on February 1 to 11% from 13%, though they still exceed those of China, Japan and the United States.

Imports of fully built luxury cars face Indian taxes and levies of about 100%, while the rate is 150% for Scotch whisky and wine.

In the highly competitive auto sector, Volkswagen VOWG_p.DE is not alone in facing tax scrutiny.

Maruti has $2.4 billion of tax demands in dispute, with at least one case concerning transactions from 1986. Volkswagen is locked in tussles over $1.2 billion, apart from the most recent demand, while Hyundai faces $488 million in such demands.

India's appeals tribunal for customs, excise and service tax faced a backlog of 80,000 cases, Sanjay Malhotra, then the revenue secretary, said in 2023. With about 20,000 new cases each year, he said, "We are not able to reduce the backlog."

In the case of Volkswagen, New Delhi accuses it of having imported most parts of 14 models in separate shipments before assembling them locally, paying tax ranging from 5% to 15%.

That strategy circumvented the tax of 30% to 35% payable if the same items were imported in a single shipment as a completely knocked down (CKD) unit.

In its court filing to be heard this month in the financial capital of Mumbai, Volkswagen is blaming Indian officials for their "inaction and tardiness" in taking years to review shipment records, some stretching back to 2012.

Had New Delhi wrapped up its reviews earlier, Volkswagen says, it could have challenged the move or re-evaluated its import strategy, but the tax notice now puts "at peril the very foundation of faith and trust" foreign investors desire.

Two government officials who spoke on condition of anonymity said the slowness of Indian bureaucracy and a lack of adequate documentation from Volkswagen both contributed to the delay.

"Long pendency like in Volkswagen's case has a detrimental effect on business," said Shashi Mathews, head of indirect tax practice at Indian law firm, IndusLaw.

"We are seeing an increase in queries from clients wanting to know the fate of their shipment reviews."

(Reporting by Aditi Shah, Nikunj Ohri and Aditya Kalra; Additional reporting by Arpan Chaturvedi; Editing by Clarence Fernandez)

((Email: [email protected]; X: @adityakalra;))

By Aditya Kalra, Aditi Shah and Nikunj Ohri

NEW DELHI, Feb 12 (Reuters) - India's demand for back taxes running into a record $1.4 billion from Volkswagen, after 12 years of scrutiny, is reigniting concerns that lengthy investigations and litigation could sour the plans of foreign firms in the fastest-growing major economy.

Automakers such as Maruti Suzuki MRTI.NS, Hyundai 005380.KS, Honda 7267.T and Toyota 7203.T face demands for about $6 billion collectively in disputes on income-tax, customs and other payments that go back years, a Reuters analysis shows.

Although Prime Minister Narendra Modi has been courting foreign investors with promises to simplify regulations and uproot bureaucratic hurdles, lengthy tax investigations remain a sore point, often triggering lawsuits that stretch over years.

In one high-profile incident, telecoms company Vodafone won its case against a $2-billion retrospective Indian tax demand after more than a decade of legal battles with New Delhi, including international arbitration at the Hague.

Now, Volkswagen's move on January 29 to sue India for $1.4 billion in tax that the firm called "impossibly enormous" is making foreign companies jittery.

Tax advisers and lawyers say they are fielding nervous queries from clients about how years-old tax cases could come back to haunt them.

Calls are also growing for an amnesty scheme for cases running for years, as India set a three-year window on February 1 to conclude reviews of customs shipments, but the rule excludes old disputes running into billions of dollars.

"The government clearly recognised this now and redressed it, but it is unlikely old tax demand notices will be given any benefit," said Ameya Dadhich, a tax associate at global law firm DLA Piper.

"Such instances can deter foreign companies from investing heavily in India," he added. "An amnesty scheme will be helpful given that around 40,000 tariff disputes are pending."

India's finance ministry did not respond to queries from Reuters.

Modi wants to turn India into a manufacturing hub, but many electronic and auto companies rely on assembly operations using parts for high-end cars or smartphones imported from markets such as China and Europe, often spurring investigations.

Government data shows total pending arrears of service tax, customs and excise levies stood at nearly $53 billion in November 2024, with a whopping 70% disputed in litigation.

In the category of import tariff, or customs disputes alone, India had made tax demands of $4.5 billion by March 2024, with a third of those pending for more than five years.

One tax adviser and a lawyer for a foreign automaker in India said the Volkswagen news sparked a flurry of calls from companies to gather updates on scrutiny of their shipments, to ensure their imports are classified correctly for tax.

TAX BACKLOG

In a move seen as aimed at placating U.S. President Donald Trump, who once called India a "tariff king", New Delhi cut average tariffs on February 1 to 11% from 13%, though they still exceed those of China, Japan and the United States.

Imports of fully built luxury cars face Indian taxes and levies of about 100%, while the rate is 150% for Scotch whisky and wine.

In the highly competitive auto sector, Volkswagen VOWG_p.DE is not alone in facing tax scrutiny.

Maruti has $2.4 billion of tax demands in dispute, with at least one case concerning transactions from 1986. Volkswagen is locked in tussles over $1.2 billion, apart from the most recent demand, while Hyundai faces $488 million in such demands.

India's appeals tribunal for customs, excise and service tax faced a backlog of 80,000 cases, Sanjay Malhotra, then the revenue secretary, said in 2023. With about 20,000 new cases each year, he said, "We are not able to reduce the backlog."

In the case of Volkswagen, New Delhi accuses it of having imported most parts of 14 models in separate shipments before assembling them locally, paying tax ranging from 5% to 15%.

That strategy circumvented the tax of 30% to 35% payable if the same items were imported in a single shipment as a completely knocked down (CKD) unit.

In its court filing to be heard this month in the financial capital of Mumbai, Volkswagen is blaming Indian officials for their "inaction and tardiness" in taking years to review shipment records, some stretching back to 2012.

Had New Delhi wrapped up its reviews earlier, Volkswagen says, it could have challenged the move or re-evaluated its import strategy, but the tax notice now puts "at peril the very foundation of faith and trust" foreign investors desire.

Two government officials who spoke on condition of anonymity said the slowness of Indian bureaucracy and a lack of adequate documentation from Volkswagen both contributed to the delay.

"Long pendency like in Volkswagen's case has a detrimental effect on business," said Shashi Mathews, head of indirect tax practice at Indian law firm, IndusLaw.

"We are seeing an increase in queries from clients wanting to know the fate of their shipment reviews."

(Reporting by Aditi Shah, Nikunj Ohri and Aditya Kalra; Additional reporting by Arpan Chaturvedi; Editing by Clarence Fernandez)

((Email: [email protected]; X: @adityakalra;))

Feb 6 (Reuters) - Ashok Leyland Ltd ASOK.NS:

• INDIA'S FADA: OVERALL AUTO RETAIL GREW BY 6.6% YOY IN JAN

• INDIA'S FADA: PERSISTENT CASH-FLOW CONSTRAINTS, SUBDUED INDUSTRIAL DEMAND COULD CAP UPSIDE POTENTIAL

• INDIA'S FADA: SUPPORTIVE POLICIES, POST-BUDGET STIMULUS MAY HELP SUSTAIN SECTOR’S EARLY-YEAR GAINS

• INDIA'S FADA: ONGOING FESTIVE/WEDDING DEMAND, FRESH PRODUCT INTRODUCTIONS COULD SUSTAIN FOOTFALLS IN NEAR-TERM

• INDIA'S FADA: NEARLY HALF OF DEALERS ANTICIPATE GROWTH IN FEB,43% EXPECT SALES TO STAY FLAT,11% FORESEE DIP

• INDIA'S FADA: AUTO RETAIL SECTOR ENTERS FEBRUARY WITH CAUTIOUS OPTIMISM

Source text: [ID:]

Further company coverage: ASOK.NS

(([email protected];;))

By Nikunj Ohri, Aditya Kalra and Aditi Shah

NEW DELHI, Feb 5 (Reuters) - India has accused South Korea's Kia of evading taxes of $155 million by misclassifying component imports but the carmaker has denied wrongdoing, the latest fight by a foreign automaker with New Delhi over tariffs, according to a document and two sources.

Kia competes with Hyundai 005380.KS and Maruti Suzuki MRTI.NS in the world's third-largest auto market, where it has a share of 6% of roughly 4 million units a year, and its Kia Seltos and Sonet SUVs are among the top sellers.

Foreign companies in India face headaches from high taxes and long-drawn-out investigations.

For example, Tesla TSLA.O has publicly complained about high taxes on imported EVs and Volkswagen VOWG_p.DE last week sued over a demand for a record $1.4 billion in back taxes that it called "impossibly enormous".

Tax officers sent a confidential notice to Kia's Indian unit in April 2024, flagging alleged tax evasion of 13.5 billion rupees, according to a government notice Reuters is reporting for the first time.

The offence centred on incorrect declaration of imports of components for the assembly of the carmaker's luxury Carnival minivan, the notice showed.

In a statement to Reuters, Kia India said it made "a detailed response, supported by comprehensive evidence and documentation to substantiate" its stand and the authorities were still reviewing the matter.

Kia India is committed to complying with all regulations and has "consistently cooperated with" authorities, it added.

India's finance ministry and customs officials did not respond to Reuters queries.

In its 432-page notice, the government said tax authorities found Kia's Carnival "car model was being imported in parts or components in separate lots" via different ports, with the "intent to discharge lesser customs duty".

Kia devised the strategy to ensure the imports "could not (be) detected by customs," it added in the notice, issued by a customs commissioner in the southern city of Chennai.

Two sources said Kia's 000270.KS case was similar to that of Volkswagen, accused of evading a higher tax of 30% to 35% applicable on parts imported in "completely knocked down" or CKD form in a single shipment, instead shipping separate parts over days, making them eligible for a tax rate of just 10% to 15%.

During the investigation, Kia's website showed the Carnival model sold in India as being in "CKD" form, with retail sales of 9,887 units between 2020 and 2022, the tax notice said.

The Volkswagen investigation spanned 14 car models from the Skoda Kodiaq to the Audi A3 and the Volkswagen Tiguan.

In contrast, Kia's case concerns only the Carnival model, a seven-seater priced around $73,500, which is among its most expensive cars in India.

KIA COULD FACE $310 MLN PAYOUT

Indian tax rules could require Kia to pay up to $310 million if it loses the dispute, or roughly double the amount evaded, due to penalty and interest.

The latest available corporate filings in India show Kia's domestic annual sales of $4.45 billion in fiscal 2022/23 were its highest ever, up 53% on the year, for net profit of $243 million.

Last week, India slashed import duties on fully-built high-end motorcycles to 30%, in a move widely seen as looking to placate U.S. President Donald Trump, who has in the past called India a "tariff king".

But fully-assembled imported cars still attract a levy of more than 100%.

Kia has deposited 2.78 billion rupees ($32 million) "under protest" as it continues to fight the Indian tax notice, which is still proceeding, said a government source who declined to be named as the matter is private.

In 2022, authorities searched Kia offices and a factory in the southern state of Andhra Pradesh and took statements from India executives, some of whom the document identifies as Chief Procurement Officer Lee Sang Hwa, and Chief Finance Officer Kiho Yoo.

During the investigation, Kia executives "changed their stance and have made efforts to mislead," the tax notice stated, referring to statements on imports, manufacturing and taxation.

Kia was accused of importing more than 90% of the parts for Carnival, constituting a car in CKD form, which attracts higher tax, it added.

India's head of indirect taxes, Sanjay Kumar Agarwal, told Reuters the law was clear and some automakers were flouting it by not paying applicable CKD duties.

"If they are on the wrong side, then the department will have to issue a notice," he said in an interview on Tuesday.

(Reporting by Nikunj Ohri, Aditya Kalra and Aditi Shah; Additional reporting by Munsif Vengattil; Editing by Clarence Fernandez)

((Email: [email protected]; X: @adityakalra;))

The author is a Reuters Breakingviews columnist. The opinions expressed are her own. Updates to add graphic.

By Shritama Bose

MUMBAI, Feb 3 (Reuters Breakingviews) - India is retreating from a long-term goal to improve its finances. Prime Minister Narendra Modi’s administration on Saturday proposed cuts to levies on personal income to shore up consumption which is growing at its slowest pace in four years. But the move drastically shrinks the taxpayer base and can go only so far in meeting its target.

New Delhi is giving up nearly $12 billion of revenue, or about 3% of its receipts for the year ending in March 2025 by raising the exemption threshold for taxpayers by 83% to 1.28 million rupees ($14,800) per year and reducing rates for people earning up to nearly twice that amount.

That offers relief to a swathe of the middle class whose wages are stagnating; it will halve the share of working-age Indians paying income tax to 1%, per Breakingviews calculations based on data from the government and the International Labour Organization. No wonder shares of carmaker Maruti Suzuki MRTI.NS and food delivery firms Zomato ZOMT.NS and Swiggy SWIG.NS jumped 6% or more during the weekend special trading session.

But it takes India a step back on its journey to widening its tax base. The country’s income-tax to GDP ratio climbed to 6.6%, a 24-year high in the year ended March 2024 on the back of improved collection efficiencies. The U.S. ratio is in double digits, per World Bank data.

India could boost the spending power of a wider group of people and ease inflation if it slashes levies on fuel or cooking gas, but getting the country's 28 provinces to agree to lower revenue from fuel makes that a taller task.

For now, the government is relying on the Reserve Bank of India. Policymakers are pencilling in a higher dividend from the central bank to make up part of its revenue shortfall. They will also expect the RBI to deliver a rate cut to push discretionary spending, although the global trade war unleashed by Washington will make trimming borrowing costs harder.

The core issue of weak incomes is harder to solve. Real average monthly earnings of salaried and self-employed workers in the year ended March 2024 fell below the levels they were at six years ago, with the female self-employed cohort seeing the steepest drop of 32%, per the government's economic survey.

Modi's tax cuts will leave more money in people's pockets, but it's a short-term fix.

CONTEXT NEWS

India will propose cutting personal income tax rates to boost the spending power of the middle-class, Finance Minister Nirmala Sitharaman said on Feb. 1, as she announced the government's annual budget for the financial year to March 2026.

People earning up to 1.28 million rupees ($14,800) a year will not have to pay any taxes, raising the exemption threshold from $8,074. The top tax rate of 30% will apply to annual income above 2.4 million rupees against the current level of 1.5 million rupees. The measures would forego around $11.8 billion in tax revenue, Sitharaman said.

(Editing by Una Galani and Aditya Srivastav)

((For previous columns by the author, Reuters customers can click on BOSE/
[email protected]))