According to foreign media reports, Hyundai, Kia, Tata and Mahindra are lobbying India’s most populous state, Uttar Pradesh, not to provide incentives for hybrid cars, saying that such a move would help their rivals, Toyota and Maruti Suzuki, and would also strike a blow to India’s goal of popularizing electric vehicles and its investment Plans. The letters from each of these four car companies to the Indian state of Uttar Pradesh underscore the fierce competition between car companies in the Indian market. Currently, the country’s tax policy is gradually favoring electric vehicles.
Last month, the state of Uttar Pradesh, which accounts for only 10 percent of India’s car sales, exempted some hybrid cars from registration tax, lowering the price of these cars by 10 percent, with consumers saving up to $5,200 on the Toyota Camry hybrid sedan, for example. Hyundai, Kia Motors, Tata Motors and Mahindra Motors have not commented publicly on Uttar Pradesh’s move, but letters from several companies to the state indicate they oppose the tax exemption on the grounds that the move would jeopardize India’s ability to meet its goal of having 30 percent of its new car sales be electric from 2030. In a letter sent on July 12, Hyundai Motor said the move would “undermine” the electrification of India’s transport, while Kia Motors said the promotion of hybrids would have a negative impact on the widespread adoption of electric vehicles.
Mahindra, on the other hand, expressed concern over the disruption in the EV market in its letter. In a letter sent on July 11, Tata said that favoring hybrids would jeopardize the $9 billion in funding the industry has committed to developing electric vehicles. Tata also added that the investment was a result of the government’s “clear focus” on the industry under Prime Minister Narendra Modi. Hyundai declined to comment, while Tata, Mahindra and Kia did not respond to requests for comment. None of the companies sells hybrid vehicles in India. Executives at several car companies said the Uttar Pradesh tax exemption initiative has sparked concern among electric car companies, who fear other states will follow suit.
However, proponents of hybrid cars argue that India does not have enough charging infrastructure for electric vehicles and should promote hybrids (which use both batteries and internal combustion engines) because they are less polluting than purely fossil-fueled vehicles. In a statement, Maruti said, “If hybrid vehicles are supported in addition to electric vehicles, this will bring significant incremental gains towards the national goal of reducing oil imports and CO2 emissions.” Toyota did not respond to requests for comment from foreign media. Uttar Pradesh transport official Vijay Kumar told the media that the state government was reviewing objections from some companies and had not yet taken any decision. The state will hold an industry meeting on August 11, he said.
The Modi government levies a federal tax of just 5 percent on electric cars and 43 percent on hybrids, slightly lower than the 48 percent tax on petrol cars. Road tax and registration tax (such as those exempted in Uttar Pradesh) are charged additionally in various states.
In FY2023-2024, India’s vehicle sales were 4.2 million units, of which less than 100,000 units of both hybrid and electric vehicles were sold.