Setback for M&M, Tata as UP says no rollback on hybrid car tax relief: Report

Hyundai, Kia Motors, Tata and Mahindra lobbied the state, which accounts for 10% of India's car sales, to remove the incentive, arguing it would make it harder to reach India's targets for adopting fully electric cars and hit investment plans

Uttar Pradesh will not reverse a decision to waive registration taxes for hybrid cars, two sources said on Monday, handing a win to Toyota but dealing a blow to Tata Motors and Mahindra & Mahindra.

Hyundai, Kia Motors, Tata and Mahindra lobbied the state, which accounts for 10% of India's car sales, to remove the incentive, arguing it would make it harder to reach India's targets for adopting fully electric cars and hit investment plans.

In a meeting between state officials and automakers on Sunday, Uttar Pradesh Chief Secretary Manoj Kumar Singh said there would not be a rollback of the decision, said an industry source and a state government official with direct knowledge.

Singh said during the meeting that the "status quo will remain", one of the sources said.

Singh did not answer calls seeking comment.

Executives say EV producers are concerned that other states could follow Uttar Pradesh, where last month's waiver of registration taxes on some hybrid cars made them 10% cheaper.

That could result in savings of up to $5,200 on a Toyota Camry hybrid sedan, for instance, a major lobbying win for the Japanese automaker.

Sunday's meeting was attended by representatives of Hyundai, Mahindra and Tata - who sought a reversal of the tax waivers, and also by Maruti and Toyota which back the scheme, said one of the sources.

Mahindra declined to comment. The other automakers said to be at the meeting did not immediately respond to requests for comment.

India imposes a federal tax of 5% on EVs while hybrids are taxed at 43%, just below the 48% for gasoline cars. State road and registration taxes are extra and determined by local governments.