According to three sources and a company letter, India's largest electric vehicle manufacturer, Tata Motors, is urging the government not to reduce taxes on hybrid vehicles because they are more polluting than pure electric vehicles, despite Toyota's calls for lower levies.
India is promoting electric vehicles (EVs) as part of Prime Minister Narendra Modi's pollution-reduction drive, taxing them at only 5%, while hybrids are taxed at up to 43%, just below the 48% imposed on petrol cars.
That has upset the likes of Japanese automaker Toyota, which popularised hybrids with the Prius, and has since last year been urging India to cut taxes on them, saying they reduce carbon emissions compared to gasoline cars. Backing its position, India's trade department last month in an internal note urged a rationalisation of taxes on hybrid cars.
Tata has met with officials and written to India's trade department, stating that the country is facing an urban air quality crisis with health implications, and that hybrids should not be incentivized because they are already taxed less than petrol cars, according to three sources familiar with the discussions.
"Any further incentivisation of hybrids will be detrimental to the climate goals and the nation's economy," Tata wrote in a confidential letter to the department, which Reuters obtained.