Taking a dig at the push for hybrid vehicles, Tata Motors’ Group CFO, PB Balaji, cast doubt on the technology’s environmental benefits, suggesting it’s primarily driven by tax breaks rather than a commitment to clean mobility.
“Hybrid is being used more as a tax break rather than actually getting into zero-carbon emissions,” Balaji said during a media call after the company’s results. “That makes it even more stark a case for justifying why there needs to be a tax cut on hybrid vehicles,” he added before adding that electric vehicles, on the other hand, are zero emission technology, though it is not absolutely foolproof.
Balaji further argued that, from a policy standpoint, hybrids are a temporary solution and shouldn’t be a central focus for government incentives. He further cited a recent report suggesting the realization that most people who drive hybrid vehicles, do it mostly on petrol, negating potential environmental gains.
This criticism comes as reports emerge about government considering tax cuts for hybrid vehicles to promote their adoption. Minister of Road Transport and Highways Nitin Gadkari is reported to have urged the finance minister to reduce the goods and service tax on hybrid vehicles to 12%. India currently levies a goods and service tax (GST) of 28 percent on vehicles powered by internal combustion engines, including hybrids, and 5 percent on electric vehicles. However, with the inclusion of cess, the tax on hybrid vehicles is over 43 percent, depending on the model.
Maruti Suzuki, which is India’s largest passenger car maker, has been advocating for a reduction in GST on hybrid cars for some time. With over 70 percent of India’s power generation currently coming from coal, Maruti Suzuki believes hybrid technology is cleaner than electric vehicles from a well-to-wheel perspective and will be relevant in the interim to lower the country’s transportation emissions.
Though there are only a few models available in the market, sales of hybrid vehicles have been gaining momentum. In 2023, the industry witnessed the share of hybrid vehicles increase to around 2% from 1.7%. Apart from Maruti Suzuki, automakers including Toyota and Honda also offer hybrid vehicles.