Karnataka Plans Tax Waivers For Hybrid Cars

Photo: Reuters/Aditi Shah/File Photo

BENGALURU, (REUTERS) – Karnataka plans to cut levies and offer financial incentives to companies in the clean mobility sector, including a steep tax cut for hybrid cars that will be a boost for Toyota, a draft of a state government document showed.

While India has focused on exemptions for electric cars, the move could make the state, home to the tech hub of Bengaluru, the second after UP to provide tax breaks to hybrid cars, for which Toyota has lobbied New Delhi.

Karnataka, which racks up India’s third-highest sales of electric vehicles (EVs), aims to drop road tax and registration charges for hybrid cars costing less than $30,000, versus 13% to 18% now.

The state aims to boost “clean mobility vehicle adoption,” which includes EVs, certain hybrids and hydrogen-based vehicles, it said in the draft, which set no deadline to finalize and unveil the policy.

Toyota’s push is at odds with rivals such as Tata Motors and Mahindra & Mahindra which want to keep the focus on EVs, saying incentives for hybrids would hurt India’s goals for their adoption.

Additionally, Karnataka plans to offer incentives of up to 25% on capital investments by makers of electric vehicles or their components, varying according to investment size and the numbers employed, the draft showed.

Indian states are trying to outdo each other in investments and tax incentives to lure the EV industry.