Toyota writes to Indian government; lobbies to cut hybrid car taxes

Hybrid Cars Tax: Japanese car maker Toyota Motor has written to the Indian government lobying for tax cuts on Hybrid cars, reported Reuters. The firm has pushed for cut by as much as one-fifth and argue that the hybrid cars are far less polluting than petrol cars but do not get commensurate policy treatment.

Toyota's Letter

India taxes EVs at just 5% while the tax on hybrid cars is as high as 43%. This is just 5 percentage points less than the levy on petrol cars which is at 48%. Toyota in its letter has said that this 5-percentage-point differential favouring hybrids over petrol cars is "insufficient", given the reduced emissions and better fuel consumption hybrids offer. It further added that the tax differential should be as much as 11 percentage points for hybrids and 14 points for flex-hybrids.

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As per Reuters calculation that would amounts to a tax rate of 37% on hybrids and 34% on flex-hybrids, cuts of as much as 14% and 21%, respectively.

Toyota's India country head, Vikram Gulati in his letter dated Sept 20 wrote, "We would kindly request for a proportionate policy support".

Electric vs Hybrid Vechicle

While Toyota is planning to expand its production capacity to meet a surge in Indian demand for hybrids, the government is pushing sales of electric vehicles (EVs), offering companies millions of dollars in incentives to build EVs and batteries.

Investors and climate groups are also crticising Toyota for still supporting Hybrids. However the car maker says that Hybrid cars make better sense for markets where the infrastructure is not ready for EVs.