Will Other States Follow UP’s Road Tax Waiver For Hybrid Cars?
Just a few days ago, the Uttar Pradesh government made a significant move by abolishing the entire road tax on strong hybrid vehicles sold in the state. The Yogi Adityanath-led UP government has announced this initiative aiming to make hybrid cars more accessible to buyers. This move not only makes hybrids more attractive but also sets a precedent that other states might follow. Whether the other states in India will follow this or not is something that we have to analyze. So without further delay, let’s jump right into it.
The decision by the Uttar Pradesh government to waive road tax on hybrids might have been influenced by the political alliance between Union Minister Nitin Gadkari and Uttar Pradesh Chief Minister Yogi Adityanath.
The MoRTH minister Gadkari had previously proposed a reduction in GST on hybrid vehicles from 48% to 12%. Unfortunately, this request was not heeded by Finance Minister Nirmala Sitharaman. So now it appears that with this road tax waiver, both Gadkari has his wish fulfilled through his new ‘friend’ Yogi Adityanath! We might be completely wrong here, but Gadkari has been very forceful about his desire to cut taxes for hybrid vehicles – and while it was denied by the central government, the UP state government was definitely more open to the idea and went ahead too.
Impact on Neighboring States
Many automotive experts believe that there is a good chance that neighboring states could also offer the same waiver to strong hybrid vehicles. These neighbors include Delhi, Punjab, Rajasthan, Madhya Pradesh and Haryana. It is also believed that if these states fail to offer this waiver to strong hybrid car buyers, they might be tempted to purchase and register their hybrid cars in Uttar Pradesh to benefit from the tax waiver. This could then lead to a significant shift in car registrations. Hence, it could prompt neighboring states to introduce similar incentives to retain their buyers.
Haryana Could Be Next
As per the sources, many believe that Haryana could become the next state to offer this road tax waiver. This is because it is the base for Maruti Suzuki. The company has its manufacturing base in the state. Now, if the Haryana government does offer this waiver, it could significantly benefit Maruti Suzuki.
The company currently has two strong hybrid models, namely Grand Vitara and Invicto. So by adopting a similar initiative, Haryana could ensure that it remains a competitive market for hybrid car buyers. It will also help in maintaining good relations with one of its largest automakers.
Gadkari’s GST Reduction Request
A few months ago, the Minister of Road Transport and Highways, Nitin Gadkari, made a proposal to reduce GST on hybrid vehicles. This was done by him to make them more affordable and promote their adoption.
However, despite his request not being accepted by the Finance Minister Nirmala Sitharaman, the road tax waiver by Uttar Pradesh has managed to achieve a similar objective at the state level. Nitin Gadkari, in his proposal, asked the Finance Minister to reduce the GST of 48 percent on strong hybrids and bring it down to 12 percent.
He highlighted that although strong hybrid cars are not as environmentally friendly as EVs, they are still a better alternative than traditional ICE vehicles. Currently, electric vehicles in India are taxed at 5 percent GST.
Hybrids vs EVs
For those who may be wondering about the benefits of buying strong hybrid vehicles, it has to be mentioned that in a country like India where charging infrastructure is still developing, they can be used with ease.
Also, strong hybrids do not rely on external charging as their batteries are recharged through the petrol engine. This makes them a more practical choice for many consumers. Additionally, hybrids deliver better fuel economy in both city and highway conditions, offering long-term cost savings.
EVs, on the other hand, pollute less but have a few glaring issues. As mentioned, the charging infrastructure is not that extensive in India. Hence, buyers cannot use these EVs for longer road trips. Also, there is a huge role of range anxiety behind EVs not becoming as popular as they should.
Hybrids Close to Overtaking EVs
As per recent sales data, it has been indicated that hybrids are close to overtaking EVs in popularity among Indian car buyers. A study by Deloitte India revealed that 44% of potential car buyers preferred hybrid vehicles over EVs.
This preference is driven by concerns about range anxiety, higher upfront costs of EVs, and the convenience of hybrid technology. So it is believed that with this recent road tax waiver, hybrid sales are likely to increase even further.
Will Other States Follow?
Now, coming to the main highlight of this topic, which is if more state governments will follow Uttar Pradesh’s lead or not. The answer to this is that it is very likely that the neighboring states could also offer a similar waiver on strong hybrid vehicles. This will not only boost the sales of automakers but will also help the country with emissions. It will also give a boost to the economy as well.
Maruti Suzuki’s reaction
RC Bhargava, Chairman of Maruti Suzuki recently commended the Uttar Pradesh (UP) government for its decision to waive registration fees for hybrid vehicles. He emphasized the importance of this move in promoting hybrid technology in India. He highlighted that achieving zero carbon emissions and reducing dependence on imported oil cannot be achieved solely through electric vehicles in the near future.