Toyota Kirloskar Motor advocates for a decarbonisation-focused tax regime on automobiles

Toyota Kirloskar Motor (TKM), one of the key players in the Indian passenger vehicle and a major advocate for hybrid powertrains in the country has said that taxation of automobiles must be based on national goals of reducing fossil fuel consumption and decarbonisation as well as on the ‘Make-in-India’ initiative. Toyota Kirloskar Motor's Executive Vice President and Country Head Vikram Gulati said that the incentives must not be reserved only for a specific technology. His comment comes at a time when several players in the Indian automobile industry have been seeing incentive aids for hybrid vehicles claiming that this technology bridges the gap between internal combustion and electric propulsion systems.

The carmaker launched the ninth generation Toyota Camry sedan in India on Wednesday, which comes at a sticker price of ₹48 lakh (ex-showroom) and carries a hybrid powertrain. The Toyota Camry hybrid has had a key role in India's move towards electrification. While speaking on the launch of the new generation Camry, Gulati told PTI that hybrid technology has a role to play in India's move towards electrification and it, along with other technologies that will help meet the national goals, must be considered for tax incentives in a proportionate manner. "We would like to see the government focus its policies towards our national goals, and in automotive our national goals are clearly built on reducing fossil fuel consumption, decarbonisation and Make-in-India. Towards that technology should be a side track," Gulati said.

Currently, only EVs enjoy incentive benefits

In the Indian market, currently, only electric vehicles enjoy the benefits of incentives from the government's EV policies. Also, the tax structure for hybrid and electric vehicles has a huge difference. The electric vehicles and hydrogen fuel cell vehicles are taxed at five per cent and 12 per cent GST rates, respectively. On the other hand, internal combustion engine-powered vehicles are currently taxed at 28 per cent GST with different cess ranging from one per cent to 22 per cent depending on vehicle type. The hybrid vehicles, being powered by both internal combustion engines and electric propulsion technologies attract the tax slabs of ICE vehicles only. This results in a tax incidence reaching to 50 per cent of the vehicle price for them at times.

Toyota advocates for tax focusing on lower fossil fuel use

Acknowledging the government's policies to drive a sustainable future, Gulati cited examples of how alternate fuels such as biofuel, ethanol or compressed biogas are being promoted. "Suffice it to say, as we evolve, and this is a very, fast-evolving environment, there always remain areas that need to be relooked, need to be brought in the current context, and taxation happens to be one of those areas," Gulati said when asked if the current system of taxes on automobiles needs a fresh approach.

He further said India also needs to have a look at how other countries in the world have gone about taxation of vehicles based on carbon emission citing the example of Europe where 22 out of 27 countries have a taxation system based on carbon emissions, which is a mirror image of fossil fuel consumption. Also, he said Brazil is now moving into policies which are looking at carbon emission from a well-to-wheel perspective. "To call ourselves zero-emission vehicles would only be true if our footprint extends beyond the tailpipe and covers the energy. I'm afraid today we are very, very far away from that, particularly for BEVs (battery electric vehicles) given the fact that our energy generation is still preponderantly fossil fuel that is coal-dependent," he said, further adding that India is going in the right direction and soon after seven-eight years this shift is going to happen.

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