While most vehicles have seen lower tax rates, hybrid vehicles face a 12.7 percent hike in effective tax.
In the past, to get more buyers to use fuel-saving technology, the government had set hybrid taxation at 30.3 percent. However, there was no difference between mild and full hybrids, so cars like Maruti’s Ciaz SHVS benefitted, despite only providing a marginal improvement as far as fuel efficiency is concerned.
To address this with GST, the government has moved hybrids to the same tax bracket as large vehicles, which attract tax of 43 percent. But, the government still hasn’t added a differentiation between mild and full hybrids. So, cars like Toyota’s Prius see hikes of ₹5 lakh, despite significant fuel-saving benefits.
The industry has notified the government to address the situation, but with the plan to go electric by 2030, very little progress has been made on this front. Though still at a nascent stage in our market, hybrids are now likely to be killed off. Car manufacturers had earlier announced plans to bring more hybrid cars to India - Hyundai had announced both mild and full hybrid cars for India, which included its Toyota Prius rivaling Ioniq (a full plug-in hybrid).
And while hybrid tech will appear in larger luxury cars, where the additional price can be accommodated, smaller, price-sensitive segments are unlikely to utilise the technology.