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 and Maruti Suzuki in the world’s third-largest auto market, where it has a share of 6 per cent 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 has publicly complained about high taxes on imported EVs and Volkswagen last week sued the government 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, 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.

Kia India said it made “a detailed response, supported by comprehensive evidence and documentation to substantiate” its stand.

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”.