CHENNAI: India’s recently revitalised auto sector has a bone to pick with the government. While generally satisfied with the rates and slabs as announced under the goods and services tax regime, the government’s decision to tax hybrids at an effective 43 per cent has riled the industry.
But Sunday’s list of revised lists indicated the government may not heed the industry’s demands to lower taxes on hybrids to 18 per cent. According to experts, this may be because of several reasons, including wanting to leapfrog hybrid step and devote complete attention to turning fully electric.
The government also does not want mild hybrids, that it feels “barely reduce” emissions, to walk away with too much gain. Data from the International Council for Clean Transportation (ICCT) shows that, of the 52,391 electric enabled vehicles sold in 2015-16, more than 63 per cent were ‘mild’ hybrids.
The ‘strong’ hybrids available are priced quite higher than the sub-Rs 20-lakh band, resulting in naturally low numbers. The entire hybrid and electric vehicle segment accounts for just 1.1 per cent of the total automobile market. But, the auto sector is crying foul, stating that hybrids are part of green-vehicle ecology and that the government should reflect the policy that spurred it to set tax for electric vehicles at 12 per cent.
The Society of Indian Automobile Manufacturers (SIAM) said in its GST rate reaction that hybrids need lower taxation. “The government has always encouraged environment-friendly technologies and with the current focus on reducing emissions... and reducing carbon footprint one would have expected the lower taxation to continue on such vehicles in a technology agnostic manner,” Vinod Dasari, president, SIAM, stated.
Other experts also think that the government might be looking at leapfrogging the entire hybrid step and turning completely electric.
“The tax structure does highly incentivise completely electric vehicles,” pointed out Abdul Majeed, partner and auto expert, Pricewaterhouse Cooper. The government had announced it wanted to go fully electric by 2030 earlier in May.
However, the industry is still pushing for a rate reduction from 43 per cent. Late on Monday, Union Heavy Industries Minister Anant Geete said that he would take up the issue with Jaitley.