Uttar Pradesh's hybrid tax waiver boosts Toyota, challenges Tata and Mahindra

Uttar Pradesh, India’s most populous state, has decided to maintain its waiver of registration taxes for hybrid vehicles. This move, confirmed on Monday, represents a notable victory for Toyota and a setback for local giants Tata Motors and Mahindra & Mahindra.

Sources familiar with the matter revealed that Uttar Pradesh Chief Secretary Manoj Kumar Singh confirmed the state’s stance during a meeting with automakers on Sunday. Singh stated, “The status quo will remain,” indicating that the waiver will not be reversed. This decision comes despite strong lobbying from major automotive players like Hyundai, Kia, Tata, and Mahindra, who argued that the tax break undermines India’s goals for transitioning to fully electric vehicles and could disrupt investment strategies in the sector.

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The waiver, introduced last month, made hybrid cars approximately 10% cheaper, potentially saving up to $5,200 on models such as the Toyota Camry hybrid sedan. This has been a significant win for Toyota, as it continues to push for greater market penetration in India.

The meeting also saw representatives from Hyundai, Mahindra, and Tata expressing their concerns over the waiver. Maruti and Toyota, on the other hand, supported the tax relief. Mahindra has opted not to comment on the decision, while the other automakers have yet to respond to requests for further comment.

The move comes amid a broader debate about electric vehicle (EV) adoption in India, where federal tax rates on EVs stand at 5%, compared to 43% for hybrids and 48% for gasoline cars. State-imposed road and registration taxes add layer of complexity, varying by region.