Toyota Kirloskar Motor (TKM), a prominent entity in the Indian passenger vehicle sector and a strong proponent of hybrid powertrains has emphasized that the taxation of automobiles should align with national objectives aimed at decreasing fossil fuel usage and promoting decarbonization, as well as supporting the 'Make-in-India' initiative. Vikram Gulati, Executive Vice President and Country Head of Toyota Kirloskar Motor stated that incentives should not be limited to a particular technology. His remarks come at a time when various stakeholders in the Indian automotive industry are advocating for incentive support for hybrid vehicles, asserting that this technology serves as a transitional solution between internal combustion engines and electric propulsion systems.

On Wednesday, the company introduced the ninth generation Toyota Camry sedan in India, priced at ₹48 lakh (ex-showroom), featuring a hybrid powertrain. The Toyota Camry hybrid has played a significant role in advancing India's electrification efforts. During the launch event for the new generation Camry, Gulati informed PTI that hybrid technology is essential for India's electrification journey and that it, along with other technologies contributing to national objectives, should be eligible for tax incentives in a balanced manner. "We hope to see the government align its policies with our national goals, which focus on reducing fossil fuel consumption, decarbonization, and the Make-in-India initiative. Technology should be considered as a complementary aspect," Gulati remarked.

Currently, only EVs enjoy incentive benefits

In the Indian market, electric vehicles are the sole beneficiaries of incentives provided by the government's electric vehicle policies. There exists a significant disparity in the tax structure between hybrid and electric vehicles. Electric vehicles and hydrogen fuel cell vehicles are subject to Goods and Services Tax (GST) rates of five per cent and twelve per cent, respectively. In contrast, vehicles powered by internal combustion engines face a GST rate of twenty-eight per cent, along with additional cess that varies from one per cent to twenty-two per cent based on the type of vehicle. Hybrid vehicles, which utilize both internal combustion engines and electric propulsion systems, are taxed under the same slabs as internal combustion engine vehicles. Consequently, this can lead to a tax burden that may reach up to fifty per cent of the vehicle's price in certain instances.

Toyota advocates for tax focusing on lower fossil fuel use

Gulati acknowledged the government's initiatives aimed at fostering a sustainable future, highlighting the promotion of alternative fuels such as biofuel, ethanol, and compressed biogas. He remarked, "As we progress in this rapidly changing environment, there are always aspects that require reevaluation and adaptation to contemporary contexts, with taxation being one of those critical areas," in response to inquiries regarding the necessity for a revised approach to the current automobile tax system.

He also emphasized the importance of examining how other nations have structured their vehicle taxation based on carbon emissions, referencing Europe, where 22 out of 27 countries implement a tax system reflective of fossil fuel consumption. Additionally, he noted that Brazil is adopting policies that assess carbon emissions from a well-to-wheel perspective. "Claiming to have zero-emission vehicles would only be accurate if our assessment includes the entire energy lifecycle, not just the tailpipe emissions. Unfortunately, we are currently far from achieving this, especially for battery electric vehicles, as our energy generation remains predominantly reliant on fossil fuels, particularly coal," he stated while expressing optimism that India is on the right path and that significant changes are anticipated in the next seven to eight years.

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