High cost of acquisition due to a variety of reasons, including higher GST than all other major countries, is slowing down car demand in the country and unless the Centre and states take steps to reduce it, the industry is unlikely to experience reasonable growth, said Maruti Suzuki India (MSI) Chairman RC Bhargava.

Addressing shareholders in the company’s Annual Report for 2020-21, Bhargava said after the devastating second wave of the coronavirus pandemic hitting the first quarter of FY22, the performance in the next three quarters will largely depend on how effectively people get vaccinated and observe safety protocols. "In March 2021, we were quite optimistic about the outlook for FY2021-22. The suddenness and ferocity of the second wave of the pandemic was a surprise to all, and led to lockdowns and restrictions in most parts of the country," he wrote.

Production and sales again dropped and the recovery that had started in the previous quarter suffered a set-back. Q1 sales were limited at 3,53,600 units, he added. Emphasizing that the future outlook hinges on how the virus is contained, he said, "The performance in the next three quarters largely depends on how effectively all our citizens follow the government's advice to get vaccinated and observe safety protocols." Bhargava further said, "If we can avert the third wave, or substantially reduce its effect, and there are no further waves, economic activities and sale of cars can improve significantly over what was achieved last year."

Net tax revenues grow 5 percent in FY21: Finance Minister

Indian economy recovering rapidly, manufacturing industry surges sharply

GST collection reaches second-highest this fiscal, Rs 1.16 lakh-crore in July