Mahindra & Mahindra has backed the government's decision not to extend tax incentives to hybrid vehicles under the Goods and Services Tax (GST) 2.0, with Group CEO and Managing Director Anish Shah asserting that electric vehicles (EVs) are the technology of the future and key to making India a global manufacturing hub.
The company currently has three EV models -- XUV400, BE 6 and XEV 9e. While the XUV400 is essentially an internal combustion engine (ICE) model converted to an electric SUV, the BE 6 and the XEV 9e are ground-up electric SUVs.
While the BE 6 and the XEV 9e were launched in India in November 2024, their customer deliveries began in March 2025. By the end of October 2025, Mahindra had delivered almost 30,000 units of the two models.
The BE 6 Batman Edition, which was launched in August 2025, was sold out in merely 135 seconds of the bookings opening. Unveiled on the eve of India's 79th Independence Day, the limited-edition model was originally planned as a 300-unit collector's edition. However, surging demand prompted Mahindra to increase allocations to 999 units.
While Mahindra had electric SUV volume market share of 25% in Q2 FY26, the penetration of electric models in its overall SUV portfolio reached 8.7% during the quarter in comparison to 7.4% for the industry.
The company will unveil a new seven-seater electric SUV, the XEV 9S, on November 27. It is built on Mahindra's dedicated INGLO skateboard architecture, which also underpins the BE 6 and the XEV 9e.
"EVs are really the technology for the future. So the broader picture also is around getting manufacturing in India ready for the world. And we are very well placed on that journey with the kind of products we make today, the competitiveness we have. We are very well ahead and well equipped on that journey," Shah said at Mahindra's Q2 FY26 results press meet.
"Hybrid is, in a sense, an interim technology, as everyone has said, and the government has made a set of decisions in the GST program, not to incentivise it. We think it is a very good and fair decision because a hybrid, without an electric charging infrastructure, is largely closer to ICE from that perspective. You need to be able to build the charging infrastructure, you need to be able to build EVs and therefore set up India for manufacturing for the world. And that is a path we are on," he added.
Earlier, hybrid cars up to 4 metres in length, with a petrol engine of up to 1,200cc or a diesel engine of up to 1,500cc, attracted 28% GST with no compensation cess. Larger hybrid cars were taxed at 28% GST plus a 15% compensation cess.
Under GST 2.0, smaller hybrid models have been moved to the 18% slab, while larger hybrids have been placed in the 40% slab. The compensation cess has been removed entirely for all automobiles. Although the overall tax rate on larger hybrids is now 40% compared to the earlier 43%, no preferential treatment has been extended to hybrids, as their effective tax structure remains similar to ICE vehicles.
The GST rate on EVs continues to be 5%, irrespective of body size or price.
In the mass market at present, the hybrid technology is limited to select models like the Maruti Suzuki Grand Vitara SUV, Maruti Suzuki Invicto MPV, Toyota Urban Cruiser Hyryder SUV, Toyota Innova Hycross MPV and Honda City e:HEV sedan.
Hybrid car volumes grew from 41,477 units in FY23 to 90,460 units in FY24 and 1,04,800 units in FY25, increasing their passenger vehicle market share from 1.1% to 2.4%. In the same period, EV volumes have increased from 58,373 units in FY23 to 99,296 units in FY24 and 1,18,096 units in FY25, with their market share rising from 1.5% to 2.7%.
Shah observed that Mahindra is aligned with the government's long-term approach of reducing reliance on subsidies for the auto industry.
"We are ready to make vehicles that are required by the market based on subsidies that may be available, but largely we feel that the government should not be subsidising vehicles in the long term. EVs are on a path where you need subsidies for the transition, and over time, you do not need subsidies going forward. That has played out well in electric three-wheelers, and we see that industry transition very rapidly from ICE to EV and subsidies will be expiring in a short period of time, and that is the right call. That is exactly what we feel the government should do," he said.
While the Indian arms of the Japanese automakers, such as Suzuki Motor Corporation and Toyota Motor Corporation, have urged the government to extend tax benefits to hybrids, homegrown auto majors like Mahindra and Tata have supported the policy focus on accelerating India's EV transition.
"The current GST guidance has kind of clarified the government's position on it (subsidies for hybrids). The choice of what GST rates go into different products is reflective, we believe, of the government's position on this. We believe, at least in the near-term, that debate is settled. There was uncertainty till the GST rate or structuring was to come out, but that has come out. And that in a way has clarified the overall direction that is intended by way of priority," said Rajesh Jejurikar, Executive Director and CEO (Auto and Farm Sectors), Mahindra & Mahindra.
The domestic SUV volumes of Mahindra increased 17% to 3,69,194 units in April to October FY26 from 3,14,714 units during the year-ago period. The company recorded its best-ever monthly SUV volumes at 71,624 units in October 2025.
On the growth outlook for the remainder of the year, Jejurikar said: "We are not changing our outlook. We are not clearly putting out an industry outlook either, but we had said mid to high teens (for Mahindra), and we are staying with that for the year. So far, we are tracking towards that."
"Whether you look at different cuts of the first half, April to October, days of festival, we are in the mid to high teens along different metrics," he added.
Mahindra's ICE portfolio comprises the Bolero, Bolero Neo, XUV 3XO, Thar, Thar Roxx, Scorpio Classic, Scorpio-N and XUV700.
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