Japan’s Toyota Motor Corp is lobbying the Indian government to cut taxes on hybrid vehicles by as much as one-fifth, saying they are far less polluting than gasoline-only cars, but do not get commensurate policy treatment, a company letter shows.
The world’s largest automaker plans to expand production capacity to meet a surge in Indian demand for hybrids, but Indian Prime Minister Narendra Modi’s administration has focused on pushing sales of electric vehicles (EVs), offering companies millions of dollars in incentives to build EVs and batteries.
India taxes EVs at just 5 percent, while the levy on hybrids is as high as 43 percent, just below the 48 percent imposed on gasoline-only cars.
Photo: Reuters
Toyota says this 5-percentage-point differential favoring hybrids over gasoline-only vehicles is “insufficient,” given the reduced emissions and better fuel consumption hybrids offer, according to its letter to Modi’s Niti Aayog think tank, which plays a key role in policymaking.
The tax differential over traditional gasoline vehicles should be as much as 11 percentage points for hybrids and 14 points for flex-hybrids, says the letter from Toyota’s India country head, Vikram Gulati.
That amounts to a tax rate of 37 percent on hybrids and 34 percent on flex-hybrids, cuts of as much as 14 percent and 21 percent respectively, according to Reuters calculations.
“We would kindly request for a proportionate policy support,” Gulati wrote in the Sept. 20 letter, which has not previously been reported.
Toyota declined to comment on the letter, but said that the “most optimal way” to reduce carbon emissions was through a mix of electrified and alternative energy options, including EVs and hybrids.
Niti Aayog did not respond to a request for comment.
Toyota has begun developing EVs while also championing hydrogen-powered vehiclefs, saying a “multi-pathway” approach is needed to solve the climate crisis.
India’s tax structure and use of typically more expensive power-train — including an engine and electrified parts such as batteries and motors — makes producing hybrids “30-35 percent costlier than its petrol counterparts,” Toyota says.
In its letter, Toyota also asks India to bring hybrid vehicles under a government incentive program that offers discounts to buyers, a scheme now available only for EVs.
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