A parliamentary committee has called for a tighter alignment of public incentives with the country’s long-term decarbonisation goals, warning that hybrid electric vehicles (HEVs) remain fundamentally dependent on fossil fuels and should not be treated on par with true zero-emission technologies.
In its key policy observations, the Parliamentary Standing Committee on Science and Technology, Environment, Forests and Climate Change noted that HEVs continue to emit tailpipe pollutants and, unlike battery electric vehicles (BEVs) and hydrogen fuel cell electric vehicles (FCEVs), do not meet the standard of zero-tailpipe emissions.
Technology Debate
It said public support mechanisms — including production-linked incentives, purchase subsidies and tax benefits — should be strategically directed towards accelerating the adoption of genuinely zero-emission vehicles.
The automotive industry in the country is currently divided over proposed tax cuts for hybrid vehicles. Japanese carmakers such as Toyota and Maruti Suzuki are lobbying for substantial reductions, while domestic manufacturers like Tata Motors and Mahindra & Mahindra—who have taken the lead in the EV race—oppose the move, arguing that it could slow the adoption of pure electric vehicles.
Policy Crossroads
The recommendation comes at a time when Uttar Pradesh, the country’s second-largest car-buying state, withdrew the exemption on road tax and registration fees for hybrid vehicles in October 2025. The exemption, which had been introduced in mid-2024, was removed entirely, dealing a setback to hybrid vehicle manufacturers such as Maruti Suzuki and Toyota.
Plug-in hybrid electric vehicles (PHEVs), the committee said, could be viewed only as a transitional technology, given their ability to run on externally charged batteries for limited distances. However, it cautioned against allowing transitional solutions to dilute policy focus on full electrification.
Recently, industry body the Associated Chambers of Commerce and Industry of India (Assocham) wrote to the Ministry of Heavy Industries (MHI), urging it to initiate discussions on granting range-extended electric vehicles (REEVs) tax parity with EVs to encourage automakers to introduce such models.
EVs in the country attract a 5% GST, along with state-specific registration and road taxes benefits. In contrast, hybrids are taxed at GST rates ranging from 18% to 40%, depending on their size. While some state governments offer concessions on registration and road tax for hybrids, these benefits are significantly lower than those available for EVs.
The panel also flagged concerns around ethanol blending, stating that while it may have a role in the interim energy transition, excessive fiscal or policy emphasis on blended fuels could inadvertently slow the shift to a zero-tailpipe-emission vehicle fleet.
The committee recommended that the promotion of ethanol blends be carefully calibrated to ensure it functions as a bridge to cleaner mobility, without delaying the large-scale adoption of battery electric and hydrogen fuel cell vehicles.
The country has already achieved its target of 20% ethanol-blended petrol (E20). It now plans to gradually scale up to E25, E27, and eventually E30 in a phased manner. However, the exact timeline is still under consideration, following concerns raised by consumers and industry experts about potential deterioration in engine performance and fuel efficiency due to higher ethanol blending.