Honda, Ford, Toyota, BMW, Renault and many more are really finding it hard to do business in India and there is a very interesting, unorthodox reason for this It is not about brand, national sentiment, quality, price or any other factor which generally comes in our mind. It is about an unusual rule of the Modi government which says if you manufacture a car 4 metre in length, then the GST is 29% but even "slightly" more, then it costs you 43% (trust me its huge) and manufactures like Maruti are enjoying this rule by making cars which are less than 4m in length. Then, why can't those MNC make cars of that same length? That is because they can't change their whole manufacturing set up just for India but for companies like Tata or Mahindra, the base customers are Indians which is not the case with Ford or Toyota.
Now, one more question may arise. Why can't they set up a manufacturing unit in India? India’s automobile industry is growing at a mere rate of 3.4% and people of our country see car as a luxury item, not a necessary one. They cannot recover their R&D and factories cost due to low demand. 30 out of 1000 citizens own a car in India and this number is 820 in US. Now you know how low the demand is. Maruti is enjoying this advantage since ages and built economies of scale (building products at a cheaper cost due to high volume) and selling 1 out of 2 cars in our country.
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