Maruti Suzuki pitches for tax support for hybrid vehicles

Shashank Srivastava, Senior Executive Director, Marketing & Sales, Maruti Suzuki said that domestic passenger vehicle sales is likely to see the best ever sales this year of almost 4 million units or 40 lakh units, despite the semiconductor shortage

September 12, 2022 09:10 pm | Updated 10:38 pm IST - NEW DELHI

There is a disadvantage for hybrid vehicles against EVs due to the difference in GST rates, says Shashank Srivastava.

There is a disadvantage for hybrid vehicles against EVs due to the difference in GST rates, says Shashank Srivastava. | Photo Credit: Kamal Narang

Maruti Suzuki on Monday pitched for a policy framework that was balanced and provided more incentives, especially on the tax front, for hybrid vehicles as well instead of being overly tilted in favour of electric vehicles.

“Yes. There is a disadvantage for hybrid vehicles against EVs [due to the difference in GST rates],” Shashank Srivastava, Senior Executive Director, Marketing & Sales, Maruti Suzuki, said

“Therefore, we think there has to be, on the tax front, some support for the hybrids as well.”

Currently, the tax rate applicable on electric vehicles in India is 5%, while the same for small hybrid vehicles is 28% and for large hybrid vehicles is 43%. For the internal combustion engine (ICE) vehicles, the tax rate is 29% for small vehicles and 45% for large vehicles.

“...it can not be a situation where all the benefits of GST accrue to only one type of powertrain. If hybrids are running 40% or 60% of the time on electric power, then there has to be some sort of support or incentive for promoting these vehicles because these are environment friendly,” Mr. Srivastava added.

A hybrid vehicle gives 35% improved vehicle efficiency compared to an ICE vehicle.

C.V. Raman, Chief Technical Officer (Engineering) at Maruti Suzuki India added that a tax differential of 2% between ICE vehicles and hybrid vehicles will not really change the equation.

“The equation in a way today, from a policy perspective, is towards EV and not towards the hybrid. There is an opportunity for every technology to exist. So, therefore, there should be some kind of rationalisation which should be kept in mind...”

2022 to see record PV sales

Talking about the industry number, Mr. Srivastava said that domestic passenger vehicle sales is likely to see the best ever sales this year of almost 4 million units or 40 lakh units, despite the semiconductor shortage.

“I think the industry PV sales will be slightly below 4 million units…around 3.8 to 3.9 million units,” he said.

For the PV industry, the previous best annual sales was recorded in 2018 with 33,94,712 units, followed by 32,29,672 units in 2017 and 30,82,421 units in 2021.

“... the pending bookings may not give the exact picture about the demand patterns because supply issues have created these backlogs. The real picture will be clear once we have enough production going,” he said.

He added that for the first time ever that the industry has crossed sales of over 9 lakh units in two consecutive quarters – in January-March sales of 9.20 lakh units and April-May sales of 9.10 lakh units. In the current quarter, Mr. Srivastava expects sales to cross sales of 10 lakh units (or million units) as in the month of July and August, the industry has witnessed sales of about 6.69 lakh units.

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