Automakers in India should cut royalty payments to foreign parent firms, says official

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NEW DELHI: Indian carmakers should reduce royalty payments to foreign partners to bring down costs instead of seeking tax cuts, a finance ministry official said on Thursday, days after reports that Toyota would halt expansion in the country due to high taxes.

Last month India’s commerce minister said in a meeting with Indian automakers, including local representatives from Toyota and Maruti Suzuki, that they should find ways to reduce royalty payments to foreign parent companies for use of technology or brand names.

Maruti Suzuki paid 38.2 billion Indian rupees ($518.5 million) in royalties to its Japanese parent Suzuki Motor in the fiscal year ending March 31, 2020, amounting to 5% of its revenue, according to its annual report.

Privately-owned companies such as Toyota Motor’s India arm paid $88 million or 3.4% of revenue to its Japanese parent, government data shows.

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