Toyota Lobbies India To Cut Taxes Up To 21% On Hybrid Cars

Toyota Motor of Japan is pressuring the Indian government to lower taxes on hybrid vehicles by as much as 21% claiming in a letter that they are far less polluting than petrol-powered cars yet do not receive comparable policy treatment, according to a source.

India only levies a 5% tax on EVs, compared to a 43% tax on hybrids, which is still less than the 48% tax on petrol-powered vehicles. According to a letter to Modi's Niti Aayog think-tank, which plays a crucial role in policymaking, Toyota claims that this 5-percentage-point differential favouring hybrids over petrol cars is "insufficient" considering the reduced emissions and greater mileage that hybrids offer.

According to Reuters, 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, according to Reuters calculations.

Toyota declined to respond to the letter but stated that an amalgamation of electrified and alternative energy sources, such as EVs and hybrids, was the "most optimal way" to lower carbon emissions.

According to Reuters, "India's tax structure and use of typically more expensive power-train - including an engine and electrified parts like batteries and motors - makes producing hybrids "30%-35% costlier than its petrol counterparts," said Toyota.

Toyota also asks that India introduce hybrid cars under a government incentive plan that provides customers with discounts, an initiative that is now only accessible for EVs. Although the government of Prime Minister Narendra Modi has focused on promoting the sales of electric vehicles (EVs), granting companies millions of dollars in incentives to produce EVs and batteries, the world's largest automaker plans to increase manufacturing capacity to match an increase in Indian demand for hybrids.