Toyota lobbies the Indian government to cut taxes on hybrid cars

Toyota Kirloskar Motor (TKM) is lobbying the Indian government to reduce taxes on hybrid cars. Reuters has reported that a company letter has revealed that TKM is lobbying the Indian government to cut taxes on hybrid cars by as much as one-fifth of the current tax rate imposed on these vehicles. The automaker has reportedly argued that the hybrid vehicles are far less polluting compared to the petrol models but do not get commensurate policy treatment.

India currently taxes hybrid cars at 43 per cent, which is just below the 48 per cent slab imposed on petrol cars. On the other hand, electric vehicles are taxed at just five per cent, which is significantly lower than the hybrid models. The report claimed that a letter from Toyota Kirloskar Motor's head of the country Vikram Gulati to the Niti Aayog think-tank, which plays a key role in policymaking, has stated that the tax differential over petrol cars should be as much as 11 per cent for hybrids and 14 points for flex-hybrids. This translates to a proposed tax rate of 37 per cent on hybrid vehicles and 34 per cent on flex-hybrid models.

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Toyota reportedly claimed that the five per cent differential between the petrol-only and hybrid cars is insufficient for the hybrid vehicles. The car manufacturer has reportedly argued that given the reduced emissions and better fuel consumption offered by the hybrid vehicles, they should be taxed at a lower rate. "We would kindly request for a proportionate policy support," Vikram Gulati reportedly wrote in his letter to Niti Aayog.

Toyota has been one of the frontrunners in popularising hybrid technology with the Prius. In India, the automaker offers models like Camry, Innova Hycross, Urban Cross Hyryder and Vellfire. In India as well as globally, Toyota has been vocal about focusing on various green powertrain technologies instead of solely focusing on EVs. In India, while Tata Motors and Mahindra have been focusing on electric vehicles, some other major automakers such as Toyota and Honda are supporting hybrids.

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To enhance its market share, Toyota is relying heavily on hybrids and it plans to expand production capacity to meet a surge in demand for these cars in the country. However, the Indian government is focussing more on electric vehicles instead of other greener powertrain technology.

Speaking about the proposed tax structure for hybrid vehicles, Toyota has reportedly claimed that the most optimal way to reduce carbon emissions is through a mix of electrified and alternative energy options, including EVs and hybrids. Toyota has also asked the Indian government to bring hybrid cars under a government incentive programme that offers discounts to buyers, a scheme now available only for EVs.

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