New Delhi is promoting hybrid cars on par with electric, upsetting EV makers

Mint

4 days ago

India's leading electric car makers–Tata Motors Ltd, Mahindra and Mahindra Ltd, and Hyundai Motor India Ltd–are up in arms over the Delhi state government's draft paper proposing equal incentives for hybrid cars and electric vehicles (EVs), according to four people aware of the matter.
A crucial meeting to discuss the issue is scheduled to be held in Niti Aayog on 30 May, the people cited above said on condition of anonymity. Whether to incentivize hybrid cars on par with EVs will be discussed at New Delhi's premier think tank, they said.
This comes after a contentious draft proposal by the Delhi government, shared with automakers on 22 April, suggested waiving off road tax and registration fee for both technologies. Currently, the benefits are given only to EVs.
The proposal has sparked strong opposition from pure EV manufacturers, who argue that hybrids, which run on conventional fuel and electric motors, should not receive the same benefits as pure EVs that solely rely on an installed battery.
What has riled the EV makers further is a 2 May advisory by the commission for air quality management in NCR (CAQM) encouraging public departments–of both central and state governments–to buy clean fuel cars, including EVs, hybrid and CNG vehicles, among others. 'Strong Hybrid Electric Vehicles (SHEV) offer substantial improvements in fuel efficiency and emission reduction as compared to conventional diesel/petrol vehicles," the advisory reads.
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The EV makers have flagged their concern with the Union ministry of heavy industries (MHI), the nodal body for EV schemes, and the central government's think tank Niti Aayog over the policy's proposal, the persons cited above said.
'Hybrid is an old technology. Although customers are free to decide what technology they want to opt for, the automakers do not want hybrids to be incentivised just like EVs," said the first person. 'This discourages investments into pure electric vehicles."
Earlier, on 14 May, the carmakers rushed to MHI to raise their concerns with Union heavy industries minister H.D. Kumaraswamy. After the meeting, most of them are said to have written letters detailing their concerns regarding the policy stance of the national capital administration to the ministry, according to the people mentioned above.
Further, the minister tweeted post the meeting saying that it was to discuss India's clean mobility roadmap. However, the people cited above said that the agenda was the automakers' objection to inclusion of other technologies under the definition of 'clean vehicles'.
Industry players argue that hybrid vehicles have higher tailpipe emissions than pure EVs and, thus, should not be incentivised.
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Shailesh Chandra, managing director of Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility, said in a written statement to Mint that the company believes government incentives should be directed toward technologies that require support to bridge a funding gap and accelerate innovation.
'Incentives are most effective when they help emerging technologies reach scale and maturity—particularly those that contribute meaningfully to long-term sustainability goals of zero emissions, such as EVs," Chandra said.
The ministry of heavy industries, Hyundai India, Mahindra, Kia, and Niti Aayog did not respond to Mint's emailed queries till press time.
Not just Delhi
To be sure, state governments across the country have started introducing special policies focused on increasing EV penetration. So far, Uttar Pradesh, Delhi and Maharashtra have floated their policies, with only Delhi and UP proposing incentives for hybrids as well. While Delhi's policy still remains in draft, Maharashtra and UP have notified their guidelines.
In FY25, the country sold over 107,000 electric cars, a growth of 18% compared to the year-ago period. As for hybrids, about 83,000 strong hybrid cars were sold in the country during the same period, as per the government's Vahan vehicle registration dashboard.
Tata Motors, Mahindra and Hyundai currently offer only pure EVs along with their conventional fuel models.
On the other hand, Maruti Suzuki and Toyota Kirlosokar have hybrid and internal combustion vehicles. Maruti is slated to launch its EVs later this year, but will mostly export its models due to tepid consumer demand in the country.
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Rahul Bharti, executive director at Maruti Suzuki, told Mint that EV penetration in India is currently less than 3%, and even in the US and Europe, it is 8% and 12%, respectively. 'While all efforts are to maximize this 3%, we cannot say we will do nothing about the balance 97%," Bharti said.
He added that the purpose and effect of strong hybrids is to replace pure diesel or petrol vehicles because they increase energy efficiency by 36-44% and reduce CO2 by 25-31% over petrol vehicles. 'Data shows wherever SHEV incentives have been given, EV sales have not reduced but increased," he said. 'We want both EV and SHEV sales to grow."
Emailed queries sent to Toyota on Thursday afternoon remained unanswered till press time.
Experts divided
Experts are divided over the issue, with some putting their weight behind EVs and others rooting for leveraging hybrids on the path to full electrification.
Sharif Qamar, associate director of transport and urban governance at The Energy and Resources Institute (Teri), a non-profit think tank, said incentives should be only for EVs. 'The objective of the EV policy is to cut down emissions of vehicles and also contribute to improving the air quality," he said. 'When it comes to the emission reduction objective, currently, only zero-tailpipe emission vehicles need to be prioritised. Incentives should be crafted to encourage players to move towards zero emission vehicles."
Others like Nikhil Dhaka, policy lead at Primus Partners, don't agree. 'Delhi's proposals in the EV policy are balancing short-term practicalities like charging infrastructure challenges," he said, adding that leveraging hybrids in the short term can offer a realistic path to reducing pollution quickly even as adoption of clean fuel cars picks up.
'Manufacturers can invest in a broader mix of clean fuel technologies," Dhaka said. 'Limited charging infra, range anxiety and higher costs of battery electric vehicles are slowing down EV adoption currently."
Analysts at HSBC Global Research in a 20 May note backed hybrids as a bridge to pure EVs. 'The latest trends reinforce our longstanding belief that India will remain a multipowertrain country for a prolonged period," the note stated. 'Hybrids, CNGs, and biofuels are practical medium- to long-term solutions, while the country moves towards eventual electrification."
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A Deloitte study also showed that demand for hybrid vehicles remains high among Indian consumers. As per its 2025 Global Automotive Consumer Study, 33% of consumers surveyed said that they would prefer to purchase a hybrid vehicle as their next preferred powertrain. In comparison, only 8% consumers expressed preference for pure EVs.
Some in the industry have argued that a lack of adequate charging infrastructure and concerns over resale value will hold back purchases of EVs by consumers.
'EVs sold today are not primary cars, but rather secondary," said Partho Banerjee, senior executive officer-marketing and sales, Maruti Suzuki India, during a media briefing on 1 April. 'Till the time we don't solve customer concerns on range, charging infrastructure, and post-sales, buyers will not have confidence."
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