Toyota lobbies India to cut taxes on hybrid cars

New Delhi, October 24

Japan’s Toyota Motor is lobbying the Indian government to cut taxes on hybrid vehicles by as much as one-fifth, arguing they are far less polluting than petrol cars but do not get commensurate policy treatment, a company letter shows.

The world’s largest carmaker plans to expand production capacity to meet a surge in Indian demand for hybrids, but Indian government has focused on pushing sales of electric vehicles (EVs), offering companies millions of dollars in incentives to build EVs and batteries.

The government taxes EVs at just 5%, while the levy on hybrids is as high as 43%, just below the 48% imposed on petrol cars.

Toyota argues this 5-percentage-point differential favouring hybrids over petrol cars is “insufficient”, given the reduced emissions and better fuel consumption hybrids offer, according to its letter to think-tank Niti Aayog, which plays a key role in policymaking. The tax differential over petrol cars 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% on hybrids and 34% on flex-hybrids, cuts of as much as 14% and 21%, respectively.

“We would kindly request for a proportionate policy support,” Gulati wrote in the September20 letter, which has not previously been reported. — Reuters

Plans to expand production capacity

• The world’s largest carmaker plans to expand production capacity to meet a surge in Indian demand for hybrids
• But Indian government has focused on pushing sales of electric vehicles (EVs), offering companies millions of dollars in incentives to build EVs and batteries
• The government taxes EVs at just 5%, while the levy on hybrids is as high as 43%, just below the 48% imposed on petrol cars