Karnataka exercises tax reductions on hybrid vehicles, along with up to 25% incentives on EV investment.
The Indian southern Karnataka state aims at cutting warrants and providing incentives for the clean mobility firms especially for the hybrid vehicles. This includes a serious cut in road tax on hybrid cars that could be of interest to Toyota, which has been campaigning for incentives on hybrids. The state intends to be second only to Uttar Pradesh in extending such tax incentives for hybrids; while India’s overall focus is still on EVs.
Hybrid Vehicle Incentives
As for hybrids, Karnataka has proposed cutting taxes on them by a big margin, which will be in the interests of manufacturers such as Toyota. Key details include:
- Cut in road tax and registration fees for hybrid vehicles that cost less than Rs. 26 Lakhs.
- Today only 13-18% of revenues go towards taxes, so these rates will be reduced.
- Make increased efforts to advocate for clean mobility vehicle adoption in the form of EVs, hybrids, and hydrogen vehicles.
EV Investment Incentives
To attract investment in the EV sector, Karnataka is offering substantial financial benefits:
- Up to 25% free-of-tax capital investments for EV manufacturers
- This is because government incentives depend on the size of investment as well as the number of new jobs to be created.
- Applicable to manufacturers of electric vehicles and batteries and recharging equipment.
- Includes expenditure on acquisition of fixed assets like land and machinery for new capacity or additional capacity elsewhere.
Broader Clean Mobility Goals
The clean mobility policy that Karnataka announced earlier is designed to lure investments up to $6 billion. With many Indian states courting investment in the EV sector, the Karnataka government’s action fits into the broader strategy unveiled by Prime Minister Narendra Modi to increase the uptake of EVs to fight pollution and import dependence on crude oil. The Indian government plans to achieve a 30% contribution of electric vehicles in total car sales by the year 2030 while the present market of hybrids and EVs is still under 100000 units per annum.
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