Hybrid or EV? Here's what the auto industry wants to hear from Budget 2024

Extending production-linked incentive (PLI) schemes and reducing import duties could attract investments by foreign automakers

Stakeholders in the passenger vehicle industry are obsessed about one of the two things: hybrid or electric, depending on where their interests lie.

Electric was once considered the sole alternative to combustion engines, but now hybrid has emerged as a strong claimant for that spot. The question staring the auto industry in the face is whether the two models can co-exist or if the policy environment will give a clear advantage to one?

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In the hybrid car segment, Maruti Suzuki and Toyota call the shots. Given the lack of charging infrastructure in the country, proponents of hybrid vehicles say it is a solid alternative.

Hybrid vehicles are currently taxed at 28 percent under GST, but there is speculation that the tax rate could be reduced to make it more affordable.

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In a recent positive for hybrids, the Uttar Pradesh (UP) government announced a complete waiver of registration tax on strong hybrid electric cars (HEVs) and plug-in hybrid electric vehicles (PHEVs) with immediate effect.

"There is an expectation for the government to introduce policies for new energy vehicles (NEVs), encompassing biofuels, plug-in hybrid vehicles (PHEVs), hybrid electric vehicles (HEVs), hydrogen, and flex-fuel vehicles," Rajat Mahajan, consulting partner at Deloitte, said. "The focus is shifting towards reducing emissions per vehicle and promoting a green energy transition. Comprehensive policies for NEVs will support this broader objective," he added.

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EV stakeholders view

The phenomenon of hybrids is more recent and EVs have been termed as the replacement of ICE vehicles. The likes of Tata Motors and Mahindra & Mahindra have been major players in the industry. The proponents of EV argue that shifting focus away from EVs could slow India's progress toward its climate goals and stifle its growth.

Also, extending production-linked incentive (PLI) schemes and reducing import duties could attract investments by foreign automakers and make India an export hub for advanced automotive technologies, they say.

While Tata Motors and Maruti Suzuki shares have gained over 2 percet each in the runup to the budget, M&M shares have declined over 5 percent.

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