UP govt waives road tax for hybrid and electric vehicles to cut down on pollution

The Uttar Pradesh government has recently announced a complete waives road tax for hybrid and electric vehicles, a step taken to promote cleaner transportation and reduce pollution. This initiative, as revealed by Nand Gopal Gupta, Minister of Industrial Development, Export Promotion, and NRI & Investment Promotion, aligns with India’s goal of achieving net zero carbon emissions by 2070.

Minister Gupta talked about the broader implications of this policy: “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.” He further added that this initiative is expected to increase EV sales, create job opportunities, and position Uttar Pradesh as a leading player in the green mobility sector.

The Federation of Automobile Dealers Associations (FADA) reported that Uttar Pradesh is one of the largest markets for passenger vehicles in India. This new policy includes a complete waiver of registration tax on strong hybrid cars, and is likely to help major automotive companies such as Maruti Suzuki India, Honda Cars India, and Toyota Kirloskar Motor. Customers as well could save up to Rs 4 lakh on popular models like Maruti Suzuki’s Grand Vitara and Invicto, and Toyota’s Hyryder and Innova Hycross.

This government’s policy offers a “100 percent waiver on the registration fee of strong hybrid electric vehicles and plug-in hybrid electric vehicles,” effective immediately. Previously, the road tax in Uttar Pradesh was set at 8 percent for vehicles priced below Rs 10 lakh and 10 percent for those costing more than Rs 10 lakh (on ex-showroom).

Market Impact

Rajat Mahajan, Partner at Deloitte India, commented on the market impact, highlighting that while the strong hybrid market in India is still in its early stages, it is growing rapidly. From a market share of 0.5 percent in 2022, it has increased to 2.5 percent in the first quarter of 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 percent compared to 5 percent for EVs, despite the fact that the total volume of hybrids and EVs are similar.”

Mahajan also talked about challenges: “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.”

He emphasised Uttar Pradesh’s significant role in the automotive market, contributing 10 percent to overall passenger vehicle sales. If successful, this initiative could serve as a model for other states.

Jitendra Patil, Managing Director of Pune-based energy-tech company ARENQ, stated, “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.”

Similarly, Raghav Arora, Co-Founder & CTO at Statiq, said “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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