Toyota Urges India to Reduce Hybrid Car Taxes by Up to 21%

Toyota is actively lobbying the Indian government to reduce taxes on hybrid vehicles by as much as 21%. The company argues that hybrids are significantly less polluting than traditional petrol cars and deserve more favorable treatment from government policies. Currently, India taxes electric vehicles (EVs) at just 5%, while the tax on hybrids is much higher at 43%, just below the 48% tax imposed on petrol cars.

Toyota's argument is that the 5% difference in tax rates between hybrids and petrol cars is insufficient, considering the lower emissions and better fuel efficiency that hybrids offer. In a letter to India's Niti Aayog think-tank, which plays a crucial role in policymaking, Toyota's India country head, Vikram Gulati, suggests that the tax differential should be increased to 11 percentage points for hybrids and 14 points for flex-hybrids.

This proposed adjustment would result in tax rates of 37% for hybrids and 34% for flex-hybrids, representing reductions of up to 14% and 21%, respectively. The letter from Toyota, dated September 20, requests "proportionate policy support" to level the playing field for hybrid vehicles.

While some Indian automakers like Tata Motors and Mahindra & Mahindra are supporting EVs, Toyota and Honda Motor are advocating for support for hybrids. Toyota, known for popularizing hybrid technology with models like the Prius, believes that hybrids make more sense in markets where the infrastructure for EVs is not yet fully developed.

In addition to advocating for tax reductions, Toyota is also urging the Indian government to include hybrid cars in government incentive programs that currently provide discounts only for EVs. This move reflects Toyota's belief in a "multi-pathway" approach that combines electrified and alternative energy options, including both EVs and hybrids, to address climate concerns.

It's important to note that the Indian government's focus has primarily been on promoting electric vehicles and providing incentives to manufacturers for EV production, making Toyota's lobbying efforts crucial for the hybrid segment.