Karnataka plans to boost sales in the clean mobility space with this initiative
Karnataka, one of India’s leading states in adopting electric vehicles, is about to introduce a comprehensive policy aimed at promoting clean mobility. The state’s draft new policy reveals plans to offer significant tax breaks for hybrid vehicles and provide financial incentives to companies operating in the clean mobility sector, including manufacturers of EVs and their components.
The proposed measure marks a notable shift in India’s current emphasis on all-electric vehicles, adding hybrid cars to the mix. This development could benefit car manufacturers like Toyota, which has been lobbying for greater support for hybrid technology in India. Karnataka’s move could make it the second state after Uttar Pradesh to offer tax incentives for hybrid vehicles. The policy suggests removing road tax and registration fees for hybrid cars priced below Rs. 25 lakhs, which currently attract rates ranging from 13% to 18%.
A boost for hybrid cars
While India has given high priority to electric vehicles in its clean mobility initiatives, Karnataka’s new proposal introduces hybrid cars as a viable alternative. This is significant because hybrid vehicles, especially those from Toyota, combine gasoline engines with electrical power, reducing emissions without relying entirely on charging infrastructure. The plan to reduce taxes on hybrid cars could provide a new boost to the segment, which has lagged behind EVs in terms of political incentives.
However, the change is not without controversy. Rival automakers such as Tata Motors and Mahindra, which invest heavily in developing electric vehicles, have expressed concerns that promoting hybrids could dilute India’s focus on full electrification. Both companies emphasized that incentives must remain focused on electric vehicles to align with the country’s goal of increasing EV sales and reducing dependence on fossil fuels.
Incentives for the clean mobility sector
In addition to the proposed tax cuts for hybrids, Karnataka’s draft policy outlines a series of financial incentives for EV manufacturers, their components and charging infrastructure. Companies investing in the clean mobility sector can receive incentives ranging between 15% and 25% of their capital investments, depending on the size of the investment and the number of jobs created.
The state’s plan encompasses new factories and expansions of existing facilities, targeting key areas such as battery manufacturing and the production of electric vehicle charging equipment. This could further boost Karnataka’s position as a clean mobility technology hub, particularly following the state’s previous announcement of a target to attract up to $6 billion in clean mobility investments.
State-level competition for electric vehicle investments
The policy proposed by Karnataka comes at a time when Indian states are actively competing to attract investment in the EV sector. With Prime Minister Narendra Modi’s government pushing for greater adoption of electric vehicles as part of the country’s strategy to combat pollution and reduce dependence on imported oil, several states have rolled out incentives for companies that produce electric vehicles and infrastructure. related.
India’s overall automobile sales in financial year 2023/24 reached 4.2 million units, but hybrids and EVs accounted for less than 1,00,000 units each. The national goal is to increase the share of all-electric vehicles to 30% of new car sales by 2030, a target that will require coordinated efforts from central and state governments.
Looking to the future
Karnataka’s clean mobility policy, once finalized, could offer a new model to balance the promotion of hybrid and fully electric vehicles. By broadening the scope of clean mobility beyond EVs, the state aims to accelerate the adoption of green vehicles while also addressing concerns about preparing infrastructure for widespread EV use. At the same time, the policy is likely to intensify debate among industry stakeholders over the best path forward for India’s automotive future.
As the state prepares to finalize and unveil its new clean mobility policy, industry players and environmental advocates alike will be watching to see how Karnataka’s approach impacts the broader shift toward sustainable transportation in India.