Auto Manufacturers In India Say Proposed Sales Tax On Hybrids Could Make Development/Sales Impossible

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A consortium of various auto manufacturers in India is now working to convince the government there that a proposed sales tax on hybrid vehicles could well kill the development and sale of such vehicles in the country, according to recent reports.

This news follows the Indian government’s proposal to tax “hybrid vehicles at a rate as high as 43% under a new unified tax regime set to come into effect from July 1. That would be significantly higher than the prevailing tax of about 29% on such cars,” as reported by Reuters.

The chairman of Maruti Suzuki, RC Bhargava, commented: “It would drive hybrids out of the market.”

That seems to be something that doesn’t concern government officials in India, as the plan seems to be to heavily push for the adoption of electric vehicles, which makes a good amount of sense if the objective is to reduce air pollution, as hybrids are still responsible for quite a lot of urban air pollution.

Reuters provides more: “India’s auto trade body, whose members include companies such as Maruti Suzuki, Mahindra & Mahindra and Toyota Motor Corp, will push to lower the proposed rate, an industry source involved in the matter said….

“The higher tax on hybrid vehicles comes at a time when India is designing a new green car policy that incentivises electric vehicles over hybrid and conventional models. This is already worrying some carmakers that have invested in hybrid technology….

“The new tax structure proposes 12% tax on electric vehicles, about 28% tax on small petrol cars, and a 43% tax on luxury vehicles, the same rate as some hybrids. The country’s revenue secretary, Hasmukh Adhia, on Monday clarified that small hybrid vehicles would be taxed at 28% whereas large hybrids would be taxed at 43%. He did not clarify what would qualify as large hybrids.”

Notably, the auto trade body — the Society of Indian Automobile Manufacturers (SIAM) — has been pushing for hybrid and electric cars to be taxed 10% lower than petrol and diesel cars.

It would seem to make some sense to me to tax hybrids at a slightly lower rate than petrol and diesel cars are taxed at (5% less?), but maybe I’m missing something here.

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James Ayre

James Ayre's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy.

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