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Mint
2 days ago
- Automotive
- Mint
Hybrid carmakers seek tax incentives as auto industry lobbies for clean mobility benefits
New Delhi: Hybrid carmakers have approached the ministry of heavy industries seeking tax incentives, according to two people aware of the development, even as the automotive industry has raised concerns over tax parity for hybrids and pure electric vehicles. "Hybrid makers are seeking tax-related benefits because the tax for clean mobility is lower. Electric vehicles have a goods and services tax of 5%, but hybrids are taxed at par with fossil-fuel vehicles," one person said. Hybrid carmakers had approached the heavy industries ministry over the definition of clean mobility and highlighted the tax differential between fossil-fuel and hybrid vehicles, the second person said. The government will incentivise all forms of clean mobility, Mint reported on 6 June, citing heavy industries minister HD Kumaraswamy. A draft of the Delhi EV Policy 2.0 proposing parity of incentives between zero-emission electric vehicles and hybrid vehicles propped up a debate in April, leading to consultations between the heavy industries ministry and automakers. Also Read | Hybrids vs EVs: New advisory for Delhi fleet operators adds fresh fuel to fire The issue of tax incentives for hybrids has been a longstanding concern, the second person said. The matter involves aspects such as whether India can reduce the reliance on Chinese supply chains for EVs and whether state governments are willing to give up tax revenue to support hybrids. There is growing clamour to de-risk electric vehicle portfolios from Chinese supply chains, as highlighted by an industry veteran in a letter to Kumaraswamy. A clean mobility strategy that incentivises only electric vehicles is susceptible to trade-related risks, Rajan Wadhera, former president of the Society of Indian Automobile Manufacturers, said in the letter. "If we pursue only one technology for our carbon-reduction goals, we would be exposing ourselves to serious risk by becoming totally dependent on China," Wadhera said in the letter dated 4 June. However, he added that India can harness alternative technologies such as biofuels, strong hybrids, compressed natural gas, liquified natural gas and hydrogen. SHEV, PHEV Most recently, the disruption in rare earth magnet supply chains, which is controlled by China, has exposed the risks of being import-dependent for key industrial components. Magnet supply constraints could impact electric vehicle production. Maruti Suzuki, India's largest car manufacturer, Toyota and Honda Cars India are among the top makers of hybrids in the country. Maruti Suzuki and Toyota have a strategic partnership under which they share hybrid technology for their vehicles. Queries sent to Toyota Kirloskar Motor, Honda Cars India, and the heavy industries ministry remained unanswered till publishing time. Also Read | India 'increasingly important' as Suzuki's global exports hub for EVs, hybrids, small cars: Toshihiro Suzuki Hybrid vehicles, which use petrol/diesel engines with an electric motor and battery to improve fuel efficiency and reduce emissions, are of two types – strong hybrid electric vehicles (SHEVs) and plug-in hybrid electric vehicles (PHEVs). While SHEVs run mostly on fossil fuels, a battery-powered motor also aids the powertrain. On the other hand, PHEVs have a charging port for a battery that generates electricity for the car, along with an internal combustion engine that runs on fossil fuels. According to Rahul Bharti, senior executive officer for corporate affairs at Maruti Suzuki, the company is pursuing multiple technologies for decarbonisation and is trying to make SHEVs viable in India. However, the GST on SHEVs is almost similar to the rate for fossil fuel cars and their ex-factory cost is higher owing to the battery and motor. 'If we get some policy support and the volume of hybrids increases, we could go beyond Li-ion cell localisation to electrode level localisation and secure our supply chain in India," Bharti said. Compensation cess Experts said the debate over taxation of hybrid vehicles may boil down to the compensation cess component, which is levied on fossil fuel and hybrid vehicles but not on EVs. Electric vehicles attract a GST of 5%, while hybrids and fossil-fuel vehicles are levied a 28% tax. Also Read | How hybrids are reshaping India's green auto market "At present, consumers are subject to a 43% tax on vehicles powered by fossil fuels or hybrids. This consists of a 28% GST and a 15% compensation cess, the latter of which supports state revenues. For certain larger luxury cars, this may be even higher – up to 48%. In contrast, electric vehicles benefit from significantly lower taxation, with only a 5% GST," said Khushboo Jain, principal associate at Roedl & Partner India, a tax consultancy. "States may have to consider if they want to lower their compensation cess, in case the issue is discussed within the GST Council," Jain addeda
Hindustan Times
01-06-2025
- Automotive
- Hindustan Times
Delhi govt to provide subsidies to promote electric vehicles through new EV policy, says CM Rekha Gupta
Delhi government will continue to offer subsidies the electric vehicles through its new EV Policy. Delhi government will continue to offer subsidies the electric vehicles through its new EV Policy. (Getty Images via AFP) Check Offers The Delhi government will provide subsidies to people to promote electric vehicle adoption in the national capital in its new EV policy, said Delhi's Chief Minister, Rekha Gupta, on Saturday. She said that while highlighting the Delhi government's different initiatives to combat air pollution. The Delhi CM has said that the transformation of all the vehicles, including private ones, into electric vehicles (EVs) is a big vision for which the Delhi government is coming up with a new EV policy, PTI reported. "We will urge people to purchase electric vehicles for which they will be provided subsidies," she reportedly said. Gupta also said that air pollution in the national capital region is a year-long problem that requires sustained efforts, for which the Delhi government is hiring 1,000 water sprinklers to be used to combat dust on the roads throughout the year. "In view of traffic, these sprinklers will operate in early morning and late night hours so that no congestion is there on the roads," she reportedly added. Gupta reportedly urged people to adopt electric vehicles. Delhi EV Policy 2.0: What does it envision? The Delhi government drafted the new EV policy earlier this year, detailing a roadmap for the government's vision for electric mobility. The Delhi EV Policy 2.0 draft has proposed tax waivers for hybrid vehicles for the first time. The inclusion of strong hybrid and plug-in hybrid electric vehicles under the policy marks a shift from the erstwhile BEV-exclusive approach to a broader clean mobility framework. The draft policy proposed a full exemption on road tax and registration fees for hybrid vehicles with an ex-showroom price of up to ₹ 20 lakh. The draft policy states that this move would bring down the price of such vehicles and encourage car users to shift to the usage of such vehicles. Besides that, road tax and registration fees will be fully waived for all Battery Electric Vehicles (BEVs) throughout the duration of the Delhi EV Policy 2.0. However, this exemption for electric cars will apply only to those models with an ex-showroom price of ₹ 20 lakh or below. The Delhi EV Policy is known as one of the most comprehensive electric vehicle policies in India. In the five years since the policy was introduced, the National Capital Territory of Delhi has established itself as a national leader in electric vehicle (EV) adoption. During this period, the share of EVs in total vehicle sales in Delhi increased nearly fourfold, reaching an average of 12 per cent in 2024. In 2024, electric vehicle sales in Delhi saw a remarkable 30 per cent increase compared to 2022, with a total of 82,081 EVs registered during the year. With the new EV Policy, the Delhi government is aiming to ramp up the pace of EV adoption in the city and region. Get insights into Upcoming Cars In India, Electric Vehicles, Upcoming Bikes in India and cutting-edge technology transforming the automotive landscape. First Published Date: 01 Jun 2025, 10:46 AM IST
