Honda calls for decreasing taxes on Hybrid vehicles

June 29, 2022
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Honda asserts that reduced tariffs on hybrid vehicles will accelerate the adoption of EVs in India

  • India imposes a tax of 43% on hybrid vehicles, inclusive of GST, compared to 5% on battery-powered electric vehicles.
  • According to Honda, hybrid vehicles do not have range anxiety or performance concerns.

According to a top official of Honda India, reducing taxes on hybrid vehicles could accelerate the country's adoption of electric vehicles. Hybrid vehicles are now best suited for Indian conditions because they do not require widespread charging infrastructure. In India, hybrid vehicles are taxed at a rate of 43%, inclusive of the Goods and Services Tax.

Alternatively, electric vehicles (EVs) are only taxed at 5%.

Kunal Behl, vice president (marketing and sales) of Honda Cars India Ltd (HCIL), told PTI, "There is a significant disparity" (in taxes). Therefore, it would be a positive development if the government supported us [by decreasing taxes on hybrid vehicles as well] ... We propose that the authorities take it into account."

He continued, "We believe the adoption of electric vehicles would be rapid if the government could cut it."

"The worldwide trend is toward electrification. We feel that Indian customers want to be a part of the electric journey, which aligns with our drive toward carbon neutrality.

If taxes are reduced, I'm confident that people will accept it more quickly..." Behl said.

In order to meet customer demand as the shift to EVs progresses, the business aims to continue introducing internal combustion engine vehicles.

Hybrid cars

Are Hybrid Vehicles Capable?

Honda stated that hybrids continue to be the greatest option for the United States since purchasers do not have range anxiety and there are no performance issues.

Honda expects to launch 30 EV models worldwide by 2030, with an annual output of around 20 million units and a 10-year investment of $40 billion in the EV market.

According to Behl, hybrid vehicles could facilitate the transition to completely electric vehicles while reducing emissions and fossil fuel use. He stated that Honda supports the government's desire to reduce pollution and that the company feels hybrid vehicles are the way to go.

Behl remarked, "Therefore, I am confident that the government will consider re-examining favourable conditions under which customers can adapt to such technology more quickly."

Currently, India's four-wheel electric vehicle (EV) market is in its infancy. Nevertheless, according to the Delhi Electric Vehicle Policy 2020, the government expects to have at least 50 percent e-buses for all new stage carriage buses by 2020 and 25 percent electric cars by 2024.

As previously noted, the government has agreed to tax electric vehicles at a rate of only 5%, with many states providing subsidies. However, hybrid vehicles have not been included in any of the government's vehicle proliferation programmes.

According to a report by Mordor Intelligence, the Indian electric vehicle market was worth $1,434.04 billion in 2021 and is projected to reach $15,397.19 billion by 2027, growing at a CAGR of 47.09 percent throughout the forecast period.

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A seasoned Corporate Communications Specialist with over 30 years of experience in both corporations and public relations firms. Strategy, Consulting, and Relationship Management were my focus areas. In the course of her career as a communications specialist, she has helped clients achieve their communication objectives.. She has also operated her own business, which specialised in B2B strategic communications and travel consulting. Other passions travel, writing, and teaching.

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