For hybrid car makers who wanted tax cuts, hopes are fading
₹12,000 crore, the people cited above said on the condition of anonymity. FAME-II, which expires on 31 March 2024, doles out demand-side cash subsidies on the sale and purchase of hybrid and electric four-wheelers for commercial use if they meet certain price and performance criteria.
FAME-III may also include incentives for inter-city buses and e-trucks on an experimental basis, and charging infrastructure, in addition to the existing provisions under FAME-II, one of the people cited above said. Meanwhile, the department for promotion of industry and internal trade (DPIIT) and MHI are inclined to incentivize hybrids through reduced taxes, albeit at a lower level compared to battery electric vehicles, to spur new investments in the sector.
However, the industry is divided on the matter, with Japanese original equipment manufacturers (OEMs) such as Toyota and Maruti Suzuki lobbying for the technology, and domestic automakers such as Tata Motors and Mahindra & Mahindra, alongside South Korean OEMs Hyundai and KIA, intensely opposing it. According to people aware of the matter, Tata Motors, the largest passenger EV maker in India, in its submissions to the government, has argued that strong and plug-in hybrids already receive an up to 7% benefit in compensation cess compared to IC-engine cars in some segments.
And while battery EVs (BEVs) attract a GST of 5%, hybrids and IC-engine vehicles attract 28%. According to Toyota Kirloskar Motor, policy stability and continued emphasis on spurring investment and infrastructure development will be crucial to improve supply chain efficiencies.
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