Carmakers urge government to extend concessions to hybrid imports

    A differentiation in the excise duty for full hybrids and mild hybrids, with lower duty for the former, has also been requested.

    Published On Dec 02, 2016 07:00:00 AM

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    Carmakers urge government to extend concessions to hybrid imports

    The subsidy offered by government on vehicles with alternative sources of propulsion such as hybrid and electric vehicles has seen carmakers aggressively increasing the share of hybrid technology in their line-ups. While some companies such as Mahindra, Toyota and Maruti have introduced locally assembled vehicles with diverse forms of hybrid technology at a relatively lower price – thanks to the government incentives – the overall penetration of hybrids within the automotive segment still remains low. Moreover, a quite a few hybrids in the pipeline will be introduced as fully imported or completely built units, thereby losing out on benefits.

    As a result, Toyota and a clutch of other carmakers have urged the government to provide some incentives for hybrids brought to India via the CBU route.

    “Toyota and other carmakers have approached the government urging them to provide some consideration to hybrid cars brought as full imports. We have asked them to create a new ecosystem not just for Toyota, but for all companies,” a senior official from Toyota Kirloskar told Autocar India.

    The government’s FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) scheme currently benefits only the vehicles assembled in India. The scheme covers hybrid and electric technologies like mild hybrid, strong hybrid, plug-in hybrid and battery electric vehicles and offers benefits of up to Rs 1.38 lakh.

    "Extending the benefits of the scheme to imported hybrid vehicles would defeat the purpose of the scheme, which was set up to encourage local manufacturing," Sugato Sen, Deputy Director General, SIAM (Society of Indian Automobile Manufacturers) said.

    However, carmakers argue that local assembly of hybrids is not a viable option unless they have adequate volume, which can be achieved by reducing prices. It is a classic case of chicken and egg situation. “Unless carmakers have a certain volume, the price of the parts that have to be produced in India will not be viable,” the Toyota official said.

    Nevertheless, the official understood the government’s stand on incentivising only locally manufactured hybrids and said extending the benefits to CBUs would be a challenge. “I think that’s the challenge the government has to face. Because we have a logical case here since these cars pollute less, save fuel, have better technology, so they should be encouraged.”

    Toyota is preparing to launch a salvo of new cars with the latest hybrid technology over the long term. It is banking on the upbeat demand for the Camry hybrid to drive interest. The carmaker will introduce the new Prius hybrid, the first car built on the TNGA platform, in January 2017. This will come in as a full import and will showcase the company’s latest hybrid technology.

    Moreover, Toyota is set to bring the Lexus brand to India in mid-2017. Its range will include a couple of hybrids such as Lexus RX450h SUV and Lexus ES300h sedan. While initially, the set of cars will be imported, the carmaker plans to initiate local assembly, a move which will see it gaining subsidies under the FAME scheme, as well as price its vehicles competitively vis-à-vis German luxury carmakers.

    Similarly, Swedish carmaker Volvo too, plans to make a representation to the government pressing for subsidies on hybrid cars brought in as CBUs. The company recently launched its luxurious XC90 T8 plug-in hybrid SUV and deliveries are set to commence by January.

    Toyota also called for a clear demarcation in the taxation structure for full hybrids and mild hybrids, as well as a further reduction in excise duty for the former since they are more environment friendly. According to the present tax structure, hybrids attract same excise duty of 12.5 percent, irrespective of type (full or mild).

    A full hybrid such as a Toyota Prius, can be powered solely on electric power, whereas in a mild hybrid such as the Ciaz SHVS, electric power only assists the main internal combustion engine. As a result, the full hybrids are the more efficient and greener option.

    Copyright (c) Autocar India. All rights reserved.

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