ARKANSAS, Oct 23 (Future Headlines)- Japan’s Toyota Motor is actively lobbying the Indian government to reduce taxes on hybrid vehicles by up to 20%. The company argues that hybrids are significantly less polluting than petrol cars but are taxed disproportionately. India currently taxes electric vehicles (EVs) at just 5%, while the levy on hybrids is as high as 43%, just below the 48% imposed on petrol cars.
Toyota, the world’s largest carmaker, is pressing for changes in India’s tax structure to promote hybrid vehicles. It is essential to note that Toyota’s focus on hybrids is a departure from the Indian government’s emphasis on electric vehicles (EVs), for which it offers substantial incentives to manufacturers.
Toyota believes the 5-percentage-point tax differential in favor of hybrids over petrol cars is “insufficient,” considering the reduced emissions and improved fuel efficiency hybrids provide. In a letter to India’s Niti Aayog think-tank, Toyota’s India country head, Vikram Gulati, suggested that the tax differential should be 11 percentage points for hybrids and 14 points for flex-hybrids. This would result in tax rates of 37% on hybrids and 34% on flex-hybrids, representing cuts of up to 14% and 21%, respectively.
Toyota’s argument is based on the environmental advantages of hybrid vehicles. While the government is actively promoting EVs, Toyota contends that a more balanced approach is needed, emphasizing that EVs are suitable for markets with developed infrastructure, while hybrids are a more practical choice in areas where EV infrastructure is lacking.
This development highlights the ongoing debate in the automotive industry about the best strategy to reduce carbon emissions and combat climate change. While some automakers, like Tata Motors and Mahindra & Mahindra, are championing EVs in India, Toyota and Honda are advocating for hybrid support.
Toyota’s stance aligns with its strategy to prioritize hybrids in markets where electric charging infrastructure remains underdeveloped. It believes that hybrids are a practical and environmentally friendly alternative to traditional petrol cars and could help reduce emissions.
Toyota is not completely against EVs and has started developing electric vehicles. However, it maintains that a mix of electrified options, including hybrids, is the most effective way to reduce carbon emissions.
Toyota is not only requesting reduced taxes on hybrids but also seeks to include hybrid cars in government incentive programs that currently offer discounts to EV buyers. It emphasizes the cost disadvantage of producing hybrid vehicles in India, stating that they are “30%-35% costlier than their petrol counterparts.”
As environmental awareness grows, automakers are under increasing pressure to offer cleaner transportation options. The debate over the most suitable technology – EVs, hybrids, or others – is likely to continue. The role of governments and the balance between environmental concerns and economic considerations will significantly shape the future of the automotive industry in India and beyond.
Reporting by Alireza Sabet; Editing by Sarah White