Hybrids in UP: Only FAME II vehicles eligible for state scheme benefits

The Uttar Pradesh government on July 5 decided to waive the registration tax on hybrid cars, extending a concession already available to fully electric vehicles

Automakers selling hybrid vehicles in Uttar Pradesh may face delays in benefiting from a promotional scheme announced on July 5, which waived the registration tax on hybrid cars, according to a report by The Economic Times. In a letter dated July 9, the state transport authority informed manufacturers that the benefits under the state scheme would apply only to vehicles certified under the central government’s Faster Adoption and Manufacturing of Electric Vehicles (FAME II) program, it said.

The state is considering aligning incentives for hybrid and electric vehicles (EVs) with the FAME II guidelines, the business-daily said citing government sources. Some car manufacturers had expressed concerns about the incentives for hybrids announced by Uttar Pradesh, arguing that state policies not aligned with those of the central government could lead to inconsistency and confusion.

The state transport authority is unlikely to provide blanket exemptions and is contemplating specifying a price cap to incentivise only certain categories of strong hybrids, the report added. The eligibility criteria for these vehicles and the implementation guidelines are expected to be linked to FAME II.

What is the hybrid vehicle promotion scheme announced in UP?

The Uttar Pradesh government on July 5 had decided to waive the registration tax on hybrid cars, extending a concession already available to fully electric vehicles. 

The exemption will apply to various types of hybrid vehicles, including hybrid electric vehicles, strong hybrid vehicles, plug-in hybrid electric vehicles, series hybrid electric vehicles, and series-parallel hybrid electric vehicles.

PK Singh, the regional transport officer in Ghaziabad, was quoted by The Times of India as saying that the state government is continuously working to promote eco-friendly transportation, especially as air quality reaches hazardous levels during the winter. He described the new exemption as another step in this ongoing effort. Hybrid electric vehicles combine an internal combustion engine with an electric motor and a battery, improving fuel efficiency and reducing emissions. These vehicles can run on either the battery or petrol/diesel, depending on the speed.

Currently, hybrid vehicles are not categorised separately and are treated like regular vehicles. Their registration fees range from 8 per cent for cars costing less than Rs 10 lakh to 10 per cent for those priced higher.

Hybrid cars as a share of total sales in UP

Uttar Pradesh, the second-largest car market after Maharashtra, accounts for 11 per cent of total car sales. Currently, hybrids represent less than 1 per cent of the state's car market. For cars priced above Rs 10 lakh, Uttar Pradesh imposes a registration charge equivalent to 10 per cent of the ex-showroom price, the report claimed. The waiver announced on July 5 was estimated to result in a price reduction of Rs 1.5 lakh to Rs 3 lakh, depending on the model and variant, which would have narrowed the price gap between petrol models and hybrids, making hybrids more appealing.

The FAME II program had extended incentives to 55,000 electric cars and hybrid vehicles priced up to Rs 15 lakh, primarily for commercial use, such as taxi services.

In India, EVs are currently taxed at 5 per cent, while hybrids are taxed as high as 43 per cent, just below the 48 per cent tax on petrol-driven cars, the report added. Toyota, Maruti Suzuki, and Honda sell hybrids in India, although there are no plug-in hybrids available at present. The most affordable hybrid, the Toyota Urban Cruiser Hyryder, is priced at Rs 16.66 lakh (ex-showroom).

The July 9 letter also invited carmakers for a discussion on the policy. An initial round of consultations with industry stakeholders was held on July 11, during which carmakers were asked to submit written recommendations. Final guidelines specifying price caps and categories for implementing the state’s policy on incentivising electric and hybrid vehicles are expected to be announced soon, ET said.