Union Minister for Road Transport and Highways, Nitin Gadkari, has underscored the Indian government’s intent to lower GST rates on hybrid vehicles, as reported by PTI.
Gadkari revealed that a proposal to reduce GST on hybrid vehicles to five per cent and on flex-engine powered vehicles to 12 per cent has been submitted to the Finance Ministry for consideration. This development comes amid heightened advocacy from major automotive manufacturers in India, including Maruti Suzuki, Hyundai, and Toyota, who have been lobbying for tax reductions on hybrid vehicles. These automakers argue that hybrids emit fewer pollutants than their pure petrol or diesel counterparts, justifying the need for tax concessions. In contrast, Tata Motors opposes this move, contending that despite their electrified components, hybrids still rely on internal combustion engines and hence should not qualify for tax benefits due to their pollutant emissions.
Presently, hybrid cars under four metres are subject to a 28 per cent GST rate, while those over four metres face a 43 per cent rate. Gadkari has proposed reducing this to 12 per cent, aligning with his broader vision of transitioning India towards a green economy by phasing out petrol and diesel vehicles.
Gadkari’s ambition extends to the complete elimination of over 360 million petrol and diesel vehicles from Indian roads. He asserts that while challenging, this goal is attainable. “It is difficult but not impossible. This is my vision,” he stated. The minister highlighted the significant economic burden of fuel imports, which amounts to ₹16 lakh crore annually. He suggested that reducing fossil fuel imports could channel substantial funds towards enhancing the livelihoods of farmers, promoting prosperity in rural areas, and generating employment for the youth.
Furthermore, Gadkari is a strong proponent of biofuels as a sustainable alternative to fossil fuels. He believes that by promoting biofuels, India can drastically reduce its dependency on fuel imports, though he did not specify a timeline for achieving this target. This initiative reflects a growing recognition within the government of the need to support environmentally friendly technologies and reduce the carbon footprint of the transportation sector. The proposal to lower GST on hybrid vehicles represents a significant step in this direction, potentially encouraging more consumers to adopt greener transportation options. As the Finance Ministry reviews this proposal, the automotive industry and environmental advocates will be closely watching the developments, hoping for a favourable outcome that aligns with India’s broader sustainability goals.
Gadkari also said that he has been pitching for alternative fuels since 2004 and is confident things will change in the coming five to seven years. “I cannot give you a date and year for this transformation to take place as it is very difficult. This is difficult but not impossible,” Gadkari asserted. The minister also reportedly said that he firmly believes that given the speed with which electric vehicles are being introduced, the coming era will be of alternative, and biofuels and this dream will come true.
