Government of India not keen on promoting hybrid cars

Last week, a decision was taken by the GST council to increase the cess on luxury cars and hybrid vehicles. This points to a tax policy that isn't favorable for hybrid vehicles. The Minister of State for Power, Coal, New and Renewable Energy and Mines has now told the media that the government is not interested in promoting hybrid cars as they save only a small part of fuel. This has been one of the reasons behind the hike in cess on hybrid cars. Under GST, luxury cars and hybrid vehicles were included in one tax slab (28% GST) which attracted a 15 % cess taking the total to 43 %. With luxury car cess now hiked to 25 %, the effective tax rate stands at 53 %.

The government is interested in promoting electric cars and is working on a plan to ensure that all-electric cars are brought into the mainstream by 2030. That said, a shift to electric cars would also require an investment in charging infrastructure, which at the moment, is non-existent in India. 

While the Government opines that electric cars are the future of mobility, hybrid cars are seen as a stepping-stone towards an all-electric future. Currently, hybrid powertrains are offered on high-end vehicles. Without the support of the Government, it will be difficult to make hybrid cars more accessible to the mass market.