Senior industry executives noted that Uttar Pradesh is looking to align hybrid and electric vehicle (EV) incentives with the central government’s FAME II guidelines. Some automakers objected to the state’s hybrid incentives, arguing that policies not consistent with national standards could be ad hoc and cause confusion.
Carmakers in Uttar Pradesh selling hybrid vehicles may face delays in benefiting from a recent promotional scheme introduced on July 5. The state’s transport authority, through a letter dated July 9, clarified that the scheme’s benefits would only apply to vehicles certified under the central government’s FAME II program.
Industry executives revealed that the state intends to align incentives for hybrids and electric vehicles (EVs) with FAME II guidelines. Some automakers have voiced concerns that state policies that are not consistent with federal guidelines could be temporary and confusing.
Discussions suggest the state transport authority may set a price cap, incentivizing only specific types of strong hybrids, with eligibility and implementation guidelines tied to FAME II.
New guidelines are expected to be released soon. FAME II currently offers incentives to 55,000 electric and hybrid vehicles, each priced up to INR 15 lakh and designated for commercial use, like taxis.
On July 5, the Uttar Pradesh Industries Department also announced the waiver of registration charges for hybrid and plug-in hybrid vehicles effective July 1. In contrast, electric vehicles in India are taxed at 5%, while hybrids can be taxed up to 43%, slightly below the 48% for petrol cars. Major hybrid sellers like Toyota, Maruti Suzuki, and Honda operate in a market devoid of plug-in hybrids. The most affordable hybrid, Toyota’s Urban Cruiser Hyryder, starts at INR 16.66 lakh.
Following the July 9 letter, carmakers were invited for a policy discussion, with an initial consultation held on July 11, where stakeholders were asked to provide written recommendations. The final guidelines on price caps and categories for incentivizing electric and hybrid vehicles are anticipated to be announced soon.
Electric car manufacturers have opposed incentives for hybrids, citing concerns that such measures could hinder the transition to fully electric vehicles, especially during a time when electric car sales are challenged by high costs and inadequate charging infrastructure.
The debate extends to the broader strategy for reducing emissions in India. While companies like Tata Motors and Mahindra & Mahindra focus on zero-emission vehicles, others like Toyota, Maruti Suzuki, and Honda argue for a diverse approach that also promotes ethanol, flex-fuel, biogas, and hybrid technologies.
Reports on July 12 noted a downturn in domestic EV sales, echoing global trends impacted by high prices and limited charging options.
Uttar Pradesh, the country’s second-largest car market after Maharashtra and accounting for 11% of total sales, sees hybrids making up less than 1% of its market. For cars over INR 10 lakh, the state charges a registration fee of 10% of the ex-showroom price. The recent waiver is estimated to decrease prices by INR 1.5 lakh to INR 3 lakh depending on the model, potentially making hybrids more competitively priced against petrol vehicles.
