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Toyota Kirloskar Motor Pvt. Ltd vice chairman and whole-time director Shekar Viswanathan has called for equal tax on hybrid cars and electric vehicles (EVs) and urged the Indian government “to be technology agnostic” with regard to environment-friendly vehicles.
Hybrid cars are currently effectively taxed at 43% under the goods and services tax (GST) regime while the tax rate on electric vehicles is 12%.
“The tax structure needs to encourage hybrids because it is disproportionate to what the actual demand (for hybrids) can be,” said Viswanathan, terming the rate “unreasonable”.
India has outlined an ambitious plan to move to an all-electric fleet by 2030 which would enable the country to reduce its carbon footprint. The plan has left some leading car makers such as Toyota and Suzuki Motor Corp in a bind. These companies do not boast of EV technology at present and are in the process of exploring partnership to develop it, among other collaborations.
Suzuki Motor owns 56.2% of Maruti and generates the bulk of its revenue from the Indian partnership which has a market value of around $30 billion, higher than Suzuki’s $20.5 billion.
Last week, Suzuki’s chief executive Toshihiro Suzuki said that the company’s volumes in India are so large that it would be “caught flat-footed if there was a sudden shift towards electrification” in India.
Owing to the higher GST rates on hybrids, the Bangalore-based joint venture of Japan’s Toyota Motor Corporation and India’s Kirloskar group temporarily halted production of the Camry sedan hybrid, Mint reported on 24 October.
It does not sell any electric vehicles in India at the moment. From July to September, Toyota Camry hybrid sales slumped to 87 units, down 73% from 323 units a year ago, according to a Mint report on 1 November. Prices rose by about Rs4 lakh to Rs45 lakh.
To be sure, India’s largest carmaker Maruti Suzuki India Ltd also saw a dip in sales of its two hybrids, the premium sedan Ciaz and multi-utility vehicle Ertiga, the report said. Viswanathan is confident of “high demand for the Camry hybrid if the tax is brought down” while he concedes that demand may not be as high as it was pre-GST.
Toyota Kirloskar is India’s sixth-largest passenger carmaker with 81,961 units in sales from April to October.
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