Karnataka is set to introduce tax incentives for hybrid vehicles and clean mobility initiatives, aiming to attract $6 billion in investment. A draft government document outlines significant tax cuts on hybrids, potentially benefiting manufacturers like Toyota.

Focus on Clean Mobility

While India has mainly focused on electric vehicle (EV) incentives, Karnataka could become the second state after Uttar Pradesh to support hybrid vehicles. The state plans to waive road tax and registration fees for hybrids priced below Rs 25 lakh, as current fees range from 13% to 18%.

Investment Incentives

The proposed incentives include up to 25% for capital investment in EV manufacturing and components, with the amount dependent on investment size and job creation. Additionally, financial incentives of 15% to 25% will be offered for companies investing in fixed assets such as land and machinery.

Contrasting Strategies

Toyota’s push for hybrid support contrasts with competitors like Tata Motors and Mahindra & Mahindra, who prioritize EVs. They argue that hybrid incentives might hinder India’s EV adoption goals, especially with hybrid taxes potentially reaching 43%.

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Summary at glance

Karnataka is set to introduce tax incentives to promote investment in hybrid vehicles and clean mobility, aiming to attract $6 billion in new investments. The proposed tax cuts will benefit manufacturers, particularly Toyota, while waiving road tax and registration fees for hybrid vehicles priced below Rs 25 lakh. Although India has focused on electric vehicle (EV) incentives, Karnataka may become the second state to support hybrids. The draft policy also includes financial incentives for EV manufacturers and related industries.