Tax on hybrids should be merit-based: Toyota Motor

Carmakers like MSIL and Toyota would be hoping that their call on hybrids is discussed in the next GST Council meet.
Vikram Gulati, country head
and executive VP, TKM.
Vikram Gulati, country head and executive VP, TKM.

NEW DELHI: Amid growing popularity of hybrid vehicles in India, Toyota Kirloskar Motor (TKM) said the final call taken by the GST Council regarding tax relief on hybrid cars should be “merit-based” rather than the current system where taxes on four-wheelers are determined by body and engine size.

The manufacturer of Innova Hycorss and Hyryder models said they are doing their best to bring down prices of hybrids in India.

“It is up to the GST Council to take a call on GST rate on hybrids…What we are saying is that policies and taxation should be aligned towards the national goals (i.e becoming self-energy reliant and reducing carbon emission) and enabling consumers to make a better choice in terms of technology meeting those national goals,” said Vikram Gulati, country head and executive vice-president, Toyota Kirloskar Motor.

Currently, India levies a GST of 28% on vehicles powered by internal combustion engines, including hybrids, and 5% on electric vehicles. However, with the inclusion of cess, the tax on hybrid vehicles is about 43%

Carmakers such as Honda, Toyota and Maruti Suzuki have been lobbying that taxes on hybrids should be brought down as they will play an important role in the decarbonisation process. However, carmakers such as Tata Motors and Mahindra & Mahindra have opposed a rate cut on hybrids highlighting that the entire focus of the industry should remain transition towards EVs.

Now that the general elections in India are over, all eyes are on Cabinet formation and the government’s road map for the auto industry. Carmakers like MSIL and Toyota would be hoping that their call on hybrids is discussed in the next GST Council meet. Earlier, outgoing Transport Minister Nitin Gadkari said he had requested finance ministry to reduce the GST on hybrid cars to 12%. If this request is considered, prices of popular hybrid vehicles may see a price cut of Rs 2-4 lakh, bringing them on a par with petrol-powered models. For the time being, TKM said they are doing their best to bring down the prices of hybrids.

“We are trying to localise as much as we can. The key component in hybrid powertrains, the e-drive, is now made in India. It is the first plant outside of Japan in Asia and only the fourth plant worldwide. We are upskilling our workers to align with the technological shift. All these efforts should help us to become more competitive,” said Gulati. Toyota Technical Training Institute (TTTI) last month started accepting applications for its 2024-2025 programmes to provide free training to academically inclined students from economically disadvantaged backgrounds in Karnataka. The institute is increasing its intake to 1,200 students, including 600 females to promote gender diversity.

Meanwhile, TKM on Friday inaugurated its First Company Owned Toyota Used Car Outlet (TUCO) in New Delhi, the second in India, under brand name of “Toyota U-Trust”.

“With the Indian used car market projected to grow at a CAGR of 8% and currently being 1.3 times the size of the new car market, the sector holds significant growth potential. Our recent expansion of Toyota Company Owned Outlet in Delhi and plans for more outlets across key cities underscore TKM’s strategy to create a seamless, transparent, and reliable used car market for our customers, emphasizing quality and safety-focused refurbishment,” said Takashi Takamiya, Vice President at TKM.

What is Hybrid Car?

A hybrid uses more than one means of energy, combining a petrol or diesel engine with an electric motor, and the two systems work with each other. This allows the car to burn less gasoline, achieving better fuel efficiency. Carmakers such as Honda, Toyota and Maruti Suzuki have been lobbying that taxes on hybrids should be brought down as they will play an important role in the decarbonisation process.

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