The Uttar Pradesh government has announced a complete waiver of road tax for hybrid and electric cars. Nand Gopal Gupta, Minister of Industrial Development, Export Promotion, and NRI & Investment Promotion, told News18 that this initiative aims to boost cleaner transportation and reduce pollution, to achieve net zero emissions by 2070.
He emphasised, “The decision to waive off road tax for hybrid and electric cars has been taken to boost cleaner transportation and cut down on pollution. This action reflects our efforts toward sustainable growth and supports India’s target of achieving net zero carbon emissions by 2070. By promoting eco-friendly vehicles, we aim to lower dependence on fossil fuels, enhance air quality, and boost the local economy by attracting more investment in EV infrastructure and production. This initiative is likely to increase EV sales, create job opportunities, and establish Uttar Pradesh as a key player in the green mobility industry.”
The Federation of Automobile Dealers Associations (FADA) reported that UP is among the largest markets for passenger vehicles in India. This significant step by the UP government to encourage the adoption of environment-friendly vehicles by announcing a complete waiver of registration tax on strong hybrid cars is expected to benefit companies like Maruti Suzuki India, Honda Cars India, and Toyota Kirloskar Motor, with customers potentially saving close to Rs 4 lakh. The waiver applies to popular models such as Maruti Suzuki’s Grand Vitara and Invicto, Toyota’s Hyryder and Innova Hycross, and other strong hybrid vehicles.
As per the government, the policy provides a “100 per cent waiver on the registration fee of strong hybrid electric vehicles and plug-in hybrid electric vehicles” effective immediately. Previously, the UP government levied 8 per cent road tax on vehicles priced below Rs 10 lakh and 10 per cent on those costing more than Rs 10 lakh (on ex-showroom).
Rajat Mahajan, Partner at Deloitte India, told News18 that the strong hybrid market in India is at a nascent stage but is growing fast. It has grown from 0.5 per cent market share in 2022 to 2.5 per cent in Q1 2024.
He said: “If one compares with EVs which have similar market share, the growth is even more attractive as the average selling price of a hybrid vehicle is around Rs 25 lakh compared to Rs 14 lakh for the EV. GST on hybrids is still at 43 per cent compared to 5 per cent for EVs, despite that the total volume of hybrids and EVs are similar.”
“The recent circular from the government of UP to waive off road tax for strong hybrids and plug-in hybrids is a welcome move and may lead to an increase in sales of such vehicles. However, this may also result in some leakage in nearby states as people may register their cars in UP and then travel outside,” Mahajan added.
However, according to him, UP is a large state which contributes 10 per cent to the overall PV sales, and can also lead the way for other states to follow if the adoption is good. “While at this moment the 3 leading Japanese players have the relevant hybrid line-up, we can expect other OEMs to also walk this path given the growth,” said Mahajan.
Jitendra Patil, Managing Director of Pune-based energy-tech company ARENQ, added that the state government’s decision to waive registration fees for hybrid vehicles is a significant step forward in promoting clean transportation. “This will not only make hybrid cars more accessible to environmentally conscious drivers but also pave the way for wider adoption across the state. Arenq is committed to supporting the growth of the Indian EV market, and we believe this initiative will create a positive ripple effect, encouraging other states to implement similar policies,” Patil said.
Similarly, Raghav Arora, Co-Founder & CTO at Statiq: “It is a significant step toward promoting eco-friendly cars. As an EV charging company, we applaud this initiative for making sustainable vehicles more accessible. This proactive government effort will encourage people to shift towards EVs, aligning with India’s broader goals of reducing carbon emissions and advancing green technology adoption.”
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