The Uttar Pradesh government has announced a registration tax waiver on hybrid cars, which came as a relief for many consumers who have been planning to buy hybrid vehicles. Also, this comes at a time when some of the carmakers in the Indian auto industry have been seeking tax benefits on hybrid vehicles citing that they are electrified vehicles and emit fewer pollutants into the environment compared to pure internal combustion engine-propelled vehicles. Besides that, the announcement comes right ahead of the upcoming Union Budget 2024, which is slated to be tabled later this month.

While the announcement came as a breather for potential hybrid vehicle buyers and certain automakers selling hybrid vehicles, the benefits are actually available only for those hybrid vehicles that come with strong hybrid technology. In the Indian passenger vehicle market, there are variable types of hybrid vehicles available. While some use mild-hybrid technology, some come with strong hybrid tech.

The cars with the latter technology will not get the benefit of this announcement. According to a letter by the transport authority of the Uttar Pradesh government, the auto manufacturers have been informed that the benefits under the state scheme would apply only to the vehicles that are certified under the central government's Faster Adoption and Manufacturing of Electric Vehicles (FAME) 2 program. The state government is considering aligning the incentives for hybrid and electric vehicles with the FAME 2 guidelines.

Now, if you have been planning to buy a hybrid car in the state and are confused about which technology to choose to avail the benefits, the answer is clear. Only strong hybrids get the tax sops, not the mild hybrids.

Why mild hybrids are not getting the tax sops?

Previously, under the FAME scheme the central government used to offer incentives to all hybrid vehicles, irrespective of the variety of the technology. However, back in 2017, the central government withdrew incentives on mild hybrid vehicles under the FAME scheme. The Ministry of Heavy Industries and Public Enterprises announced the exclusion of mild hybrid technology from the benefits of the FAME India scheme, which came into effect on April 1, 2017.

Earlier, mild hybrid, strong hybrid, plug-in hybrid and pure electric vehicles were given incentives under the FAME scheme. However, the modification of the scheme excluded the mild hybrid vehicles from getting the program's benefits.

The latest announcement of tax benefits for hybrid vehicles by the Uttar Pradesh government comes in line with the FAME scheme. Hence, the mild hybrid vehicles have been excluded from the benefits of the new scheme.

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