In a significant move, Nitin Gadkari, the Minister of Road, Transport & Highways has proposed a substantial reduction in the tax on hybrid vehicles in India. He has suggested lowering the GST on hybrids from the current high rate of 48 percent to a much lower 12 percent. Gadkari's rationale for this reduction is based on the fact that hybrid vehicles operate significantly on electricity emitting minimal pollution.
Promoting Clean Transportation
Gadkari believes that this large gap in tax rates does not reflect the environmental benefits of hybrids compared to traditional petrol or diesel vehicles. He aims to encourage more people to choose hybrid and electric vehicles aligning with the government's goals of promoting cleaner transportation and reducing pollution.
Industry Benefits and Environmental Gains
Gadkari intends to discuss this proposal at the upcoming GST Council meeting, highlighting the potential benefits for the automotive industry, such as reduced imports and environmental gains. India's automotive sector is crucial for the country's economy, contributing significantly to GST revenue and having a thriving export market.
Growth Potential and Global Competitiveness
Recent data showing India's surpassing of Japan in new car sales indicates the sector's growth potential. Gadkari is optimistic about India's prospects of becoming a global automotive manufacturing hub within the next five years.
Technological Advancements
Gadkari recently unveiled a Toyota Innova equipped with a flex engine that can run on both petrol and ethanol. This technology, adopted by several major automakers, offers a cost-effective and environmentally friendly option, reducing the reliance on imported fossil fuels.
Impact on Market and Future Plans
If the GST reduction proposal for hybrid vehicles is implemented, there could be a surge in demand for strong hybrid cars like the Maruti Grand Vitara, Toyota Hyryder, Toyota Innova HyCross, and Honda City hybrid. More carmakers may consider introducing hybrid vehicles in the Indian market, with Maruti planning to launch strong hybrid versions of the new-gen Swift and Dzire, further accelerating adoption among a wider audience.