Toyota urges Centre to cut more taxes on hybrids

Toyota Motor has urged the central government to cut taxes on hybrid vehicles by as much as one-fifth stating that these are far less polluting than petrol cars but do not get commensurate policy treatment.

In its letter to the government, Toyota’s India Country Head Vikram Gulati has stated that the 5 per cent differential favouring hybrids over petrol cars is insufficient given the reduced emissions and better fuel consumption hybrids offer.

In Toyota’s view, the tax differential in favour of hybrids should be substantially increased to reflect the environmental advantages. They propose that the tax differential should be widened by 11 percentage points for regular hybrids and 14 points for flex-hybrids. These adjustments would result in more reasonable tax rates of 37% for regular hybrids and 34% for flex-hybrids, representing potential reductions of up to 14% and 21%, respectively. This request is a straightforward appeal for a more balanced and fair tax structure for eco-friendly vehicles.

It is to be noted that India taxes EVs at just 5 per cent, while the levy on hybrids is as high as 43 per cent. Taxes on petrol cars are at 48 per cent.

While Toyota says its request for reduced taxes on hybrid vehicles is a significant step towards shaping a cleaner and more balanced automotive industry in India, it has faced criticism from investors and climate groups for still supporting hybrids, which it says make better sense for markets where the infrastructure is not ready for EVs.

As per the company, the adjustment of taxes for hybrids is not just a business interest but a plea for more equitable policies that foster the adoption of all environmentally friendly technologies. It emphasizes the importance of having both electric vehicles and hybrids in India’s journey towards a greener and more sustainable automotive future.

In the Indian market, Tata Motors and Mahindra & Mahindra are backing EVs, while Toyota and Honda Motor want support for hybrids.