Govt mulls sops to encourage hybrid car manufacturing in India

The government is working on a policy to encourage manufacturing of hybrid cars in India through excise duty concessions, to protect environment and reduce the country's dependence on fossil fuel.

The proposal will be piloted by Heavy Industries and Public Enterprises Minister Praful Patel, an official said.

Besides, the fiscal sops like differential excise on the car, the policy is likely to incentivise research and development for development of the hybrid vehicle, he said.

"To encourage the production of these cars (hybrids), there is a need to upgrade the laboratory knowledge," he said.

The Department of Heavy Industry would also be seeking the Cabinet nod to form a high-level panel on the issue.

If approved, the panel is expected to come out with a clear-cut policy by September, the official said.

Hybrid cars, which runs both on the conventional fuel as also electricity charged battery, are at present imported in India. But the costs are quite high, as these cars are priced at least 25% more than the regular petrol or diesel fuelled vehicles.

Toyota Prius Hybrid, which is being imported in the country is priced at over Rs 25 lakh. In 2008, Honda had launched its Civic Hybrid Priced at Rs 21.5 lakh, which was slashed to Rs 13.36 lakh but has since stopped selling the car due to cost ineffectiveness.

"We have to see as to how to reduce the price to a reasonable level," the official said.

The department is also conducting a study to assess the infrastructure availability and sops needed for the promotion of these cars in the domestic market.

Cars, which run on conventional fuel, attract excise duty ranging from 10% (for small vehicles) to 22% for sedans. During 2010, India produced 1.87 million cars.

The hybrid technology is pioneered by Japan, the US and Europe.