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Business News/ Auto News / Tata Motors warns against lower GST for hybrid vehicles

Tata Motors warns against lower GST for hybrid vehicles

Top official from Tata Motors said that offering incentives for hybrid vehicles will mislead potential buyers

Shailesh Chandra, Managing Director of Tata Motors Passenger Vehicles Ltd and Tata Passenger Electric Mobility Ltd. (PTI)Premium
Shailesh Chandra, Managing Director of Tata Motors Passenger Vehicles Ltd and Tata Passenger Electric Mobility Ltd. (PTI)

Any attempt to lower tax rates levied on hybrid cars will confuse the industry and “spread thin" the government’s efforts to achieve its net-zero objectives, a senior official of Tata Motors, the country’s leading passenger electric vehicle maker, cautioned on Wednesday.

Shailesh Chandra, managing director, Tata Motors’ passenger vehicles and passenger EV divisions, said hybrid vehicles use a small battery pack and a motor that relies heavily on a fossil-fuel engine, effectively making them gasoline-run vehicles. He argued that hybrids do not align with the key objectives of achieving net carbon-zero, improving air quality levels, and cutting fossil fuel imports.

These objections come amid the Department for Promotion of Industry and Internal Trade (DPIIT) and Ministry of Heavy Industries’ move to seek the auto industry’s consensus on rationalizing taxes on hybrid passenger vehicles.

Chandra dismissed the idea of offering incentives for hybrids, calling it a “misguided effort" by some Original Equipment Manufacturers (OEMs). He pointed out that fossil fuel-based technologies, such as Gasoline Direct Injection (GDI) and Compressed Natural Gas (CNG), contribute to improving fuel efficiency without the need for additional incentives, highlighting the existing benefits for hybrids in the form of a 2% lower cess on hybrid vehicles.

India currently levies a goods and service tax (GST) of 28% on hybrid vehicles, and 5% on EVs.

Efforts by the India units of Japanese carmakers Toyota Motor Corp. and Suzuki Motor Corp., which are global leaders in hybrid technologies and have been slow in developing and adapting fully-electric vehicle technologies, to persuade the government to rationalize the GST levied on hybrid vehicles have once again split the industry into two distinct, vociferous lobbies—one, constituting domestic manufacturers Tata Motors, Mahindra & Mahindra & South Korean carmakers Hyundai and Kia, and the other consisting of Japanese carmakers Toyota, Suzuki and Honda.

To be sure, Tata Motors has repeatedly stated its position against hybrids in the past, ever since it decided to focus solely on EVs. South Korean carmaker Hyundai, too, has indicated it will not favour a tax cut on hybrids.

“If any benefit is given to hybrid, it will just confuse the entire investment profile of all OEMs, it will be a digression from the main focus of ultimately moving towards zero emission technologies," Chandra said.

He added that there is no rationale behind seeking incentives for hybrid technology, especially when it is primarily used for compliance with Corporate Average Fuel Economy (Cafe) standards and strict emission norms by “certain OEMs". “I have significant headroom when it comes to meeting my Cafe requirements, so there’s absolutely no need for me to think about hybrids," he said.

When asked about Tata Motors’ stance on other technologies like flex-fuel vehicles and ethanol-powered vehicles, Chandra said that the company is still studying these options, but expressed scepticism about incentivizing technologies that do not face ecosystem or technology cost challenges. “Support should be directed where technology and infrastructure challenges exist and where technologies, like electric vehicles (EVs), address critical issues. Only zero-emissions technologies should be electrified," Chandra told Mint.

Tata Motors expects it will grow its EV sales by 40% in 2024 compared to last year, when it sold 69,000 EVs, led by three new products built on an all-new, and Tata Motors’ first pure-electric architecture acti.ev. The carmaker launched the Punch EV, a pure-electric version of its popular micro-SUV Punch, at a starting price of 11 lakh. Tata Motors will launch a clutch of ‘gen-two’ products on its acti.ev platform, including the Curvv, Harrier, Altroz and Sierra EVs, followed by the launch of its premium line of EVs based on a ‘gen-three’ premium electric platform Avinya, which will be based on a common platform between Tata Motors and its UK-based luxury carmaker counterpart Jaguar Land Rover.

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Alisha Sachdev
Alisha Sachdev reports on the auto and mobility sector, with a special focus on emerging clean mobility technologies.
Catch all the Auto News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
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Published: 17 Jan 2024, 11:01 PM IST
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