Government to Maintain High Duty Differential Between EVs and Hybrids

In a significant announcement that could impact the strategies of auto companies like Maruti Suzuki, Toyota, and Honda, G20 Sherpa Amitabh Kant reaffirmed the government’s commitment to a substantial duty differential between electric vehicles (EVs) and hybrids. This policy aims to accelerate the adoption of zero-emission technologies and bolster India’s green mobility initiatives.

Speaking at an event organised by Mercedes-Benz Research and Development India, Kant emphasised the government’s unwavering support for clean mobility through various policy measures. He reiterated the existing tax framework, where EVs face a nominal 5% tax compared to the 48% levied on hybrids. This differential is intended to remain in place for an extended period.

Japanese automakers, including Maruti Suzuki, Toyota, and Honda, have advocated for reducing the GST rates on hybrids. They argue that hybrids offer a cleaner alternative to pure-petrol vehicles and should be incentivised. However, domestic players like Tata Motors, Mahindra & Mahindra, and international brands like Hyundai Motor India and Kia India oppose this proposal. They contend that only zero-emission technologies deserve incentives and that intermediate solutions like hybrids should not receive concessions.

Kant reiterated the government’s unwavering focus on promoting electrification in mobility. He highlighted the role of CAFE norms (Corporate Average Fuel Economy) in driving this transition. The government aims to push automakers towards developing and adopting electric vehicles by setting stringent fuel efficiency standards.

To further accelerate the adoption of electric buses, Kant announced plans for larger tenders in the future. Following an initial tender for 6,000 electric buses, the government intends to procure 10,000 and eventually 50,000 buses. This scale is expected to drive down the costs of electric buses, making them more accessible to cities across India.

Kant warned that India risks losing its leadership position in EV manufacturing if it fails to embrace cleaner technologies. He emphasised the importance of proactive measures to ensure that the country remains at the forefront of the global electric mobility revolution.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.