Tata Motors Group CFO, PB Balaji, has recently revealed his skepticism regarding the government’s proposal to reduce taxes on hybrid vehicles. Balaji’s remarks come as Minister of Road Transport and Highways, Nitin Gadkari, stated that the government should push for tax cuts on hybrids. He recently urged the finance minister to reduce the GST on strong hybrid vehicles from 28 percent to 12 percent. Gadkari highlighted that it will help in promoting the adoption of hybrids in the country.
Tata Motors CFO on tax cuts for hybrids
During a recent media call following Tata Motors’ financial results, PB Balaji, the CFO of Tata Group, has expressed doubts about the environmental benefits of hybrid technology. He stated that tax breaks are the primary driving force behind its promotion. He emphasized that hybrids are often used more for availing tax benefits rather than achieving zero-carbon emissions.
“Hybrid is being used more as a tax break rather than actually getting into zero-carbon emissions,” Balaji stated. With his statement, he has highlighted that there is a need for a critical examination of the rationale behind tax incentives for hybrids.
Apart from this, Balaji also highlighted the superiority of electric vehicles (EVs) in terms of zero emissions. Balaji, with his statement, argued against making hybrids a central focus of government incentives. He labeled strong hybrid vehicles as a temporary solution from a policy standpoint.
He referenced a recent report indicating that the majority of hybrid vehicle owners primarily rely on petrol. With this, he highlighted that this negates potential environmental gains. Currently, India imposes a GST of 28% on vehicles with internal combustion engines, including hybrids.
Meanwhile, all fully electric vehicles enjoy a lower tax rate of 5%. However, with additional cess, the effective tax rate on hybrids exceeds 43%. This, over the years, has made it difficult for average car buyers to buy a strong hybrid vehicle in the country.
Tata Motors’ stance against hybrids
This is not the first time that an official from Tata Motors has stated something against hybrids. Back in December 2018, Tata Motors CEO Guenter Butschek came out strongly against incentives for hybrid cars. He stated that reducing taxes on strong hybrids is a backward step.
With this statement, Butschek highlighted that the Government of India should not change its policy from time to time as this makes business difficult. He stated that carmakers are already heavily invested in electric vehicle technologies and policy flip-flops will lead to big losses.
He added that creating a policy which reduces taxes on strong hybrids will make adoption of electric vehicles much slower in India. Butschek highlighted that it will slow down the government’s push towards electrifying vehicles and making India less reliant on fossil fuels.
Nitin Gadkari’s request
Nitin Gadkari, the Union Minister of Road Transport and Highways, recently emphasized the need to slash the Goods and Services Tax (GST) on hybrid vehicles. According to him, the rates should be cut from the current 48 percent to just 12 percent.
The MoRTH minister highlighted that although not as clean as electric vehicles, hybrid vehicles still provide environmental benefits. He added that hybrids are 60 percent electrically operated and emit minimal pollution compared to ICE vehicles. So, he believes that hybrids should not suffer because of a 48 percent tax.
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