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Mint
22-07-2025
- Automotive
- Mint
Clean mobility crossroads: Why states side with EVs over hybrids
India's push for clean mobility is hitting a fork in the road, as states increasingly diverge from the Centre's approach to supporting all types of clean vehicles. The growing divide, evident in automobile policies in various states, has also set the stage for intense lobbying, as rivals vie for policy support. At the central level, the view is to treat electric and hybrids equally when it comes to incentives. But states are having different thoughts. Key states like Maharashtra, Karnataka and Madhya Pradesh have decided to reserve incentives for battery EVs (BEVs) in their automobile policies for 2025, a Mint review found. Chhattisgarh recently tweaked a 2022 policy to explicitly remove incentives for hybrids. While Uttarakhand and Delhi had toyed with incentives for hybrids in their draft policies, the former is now reconsidering its position, a person aware of the matter said. State choice 'In Para 3 of the said rule, the phrase 'Hybrid electric vehicles will be eligible to receive 50% of the purchase incentive amount given to a fully electric vehicle' should be replaced with 'No subsidy will be given to any type of hybrid vehicles'," Chhattisgarh government said on 29 May. Union ministers have backed equal treatment for both EVs and hybrids. "Under the FAME-II Scheme, EV and hybrid versions of electric four-wheelers were allowed for incentivization. Similarly, in the case of the PM E-Drive scheme, a hybrid version of e-ambulances, that is, electric plug-in hybrid & strong hybrid, shall be incentivized," Union heavy industries minister H.D. Kumaraswamy said in a June 6 interview. Union road minister Nitin Gadkari too has backed both hybrid and ethanol-powered cars. While EV makers demand incentives should be reserved for zero-tailpipe emission vehicles, hybrid makers say their vehicles are far more fuel-efficient than conventional ICE vehicles, and that they serve as a bridge to a cleaner future. Few takers According to analysts at HSBC Global Research, at the end of 2024, only five states and union territories had incentivized sales of hybrid vehicles, which included Uttar Pradesh, Haryana, Rajasthan, Chandigarh and Chhattisgarh. With the withdrawal of hybrid incentives in Chhattisgarh, the number has reduced to four. Incentives by Delhi and Uttarakhand haven't been implemented yet, with final EV policy notification expected in months ahead. With states charting their own course to clean mobility through targeted policies, the hybrid lobby led by Maruti Suzuki has locked horns with the EV lobby led by Tata Motors and Mahindra and Mahindra. 'We believe that government incentives should be directed toward technologies that require support to bridge a funding gap and accelerate innovation. Incentives are most effective when they help emerging technologies reach scale and maturity—particularly those that contribute meaningfully to long-term sustainability goals," a Tata Motors spokesperson said in response to queries on policy stance of state governments. Bridge to future Maruti Suzuki argues that promoting hybrids can reduce pure diesel and petrol vehicle sales, leading to an overall reduction in pollution. Rahul Bharti, senior executive officer, corporate affairs at Maruti Suzuki, said, "EV penetration in India is still around 3%. While all efforts should be made to maximize this, it still leaves 97% unaddressed. If we have to achieve the national objectives of decarbonization and oil import reduction, this 97% cannot be ignored. A technology like Strong Hybrid reduces CO₂ emission by 26-32% and improves fuel efficiency by 35-44% over pure petrol/diesel. However, it has a viability gap which needs to be addressed, as many countries of the world and many Indian states are already doing by incentivizing hybrids." The reluctance among states to include incentives for hybrid vehicles comes at a time when the automobile industry is locked in a sharp contest over a provision in Delhi's EV policy. Mint reported on 30 May that top automakers including Tata Motors, Mahindra and Mahindra and Hyundai Motor India Ltd had approached the heavy industries ministry and federal thinktank Niti Aayog after the Delhi government proposed to include incentives for hybrid vehicles on par with EVs in its upcoming EV policy. Tata Motors, MG Motor India, Mahindra and Mahindra and Hyundai Motor India are India's leading EV manufacturers. Maruti Suzuki, Toyota India and Honda Cars India are the only companies offering hybrids. Policy dilemma 'In India, the broader policy consensus so far has been not to incentivize hybrids, with most benefits reserved only for BEVs," said Nikhil Dhaka, vice-president at consultancy firm Primus Partners. As companies slug it out, independent experts are also split on whether or not to incentivize hybrid vehicles. '(Not incentivizing hybrids) could be a missed opportunity, especially since our EV infrastructure is still developing. Only a few states like Delhi and Uttarakhand have taken steps to support strong and plug-in hybrids by offering some incentives," Dhaka of Primus Partners said, adding hybrids can reduce fuel use and emissions right away, making them a useful option while India builds a stronger EV ecosystem. Sharif Qamar, associate director of transport and urban governance at The Energy and Resources Institute (Teri), differed. 'The objective of the EV policy is to cut down emissions of vehicles and also contribute to improving the air quality," he said. 'When it comes to the emission reduction objective, currently, only zero-tailpipe emission vehicles need to be prioritized. Incentives should be crafted to encourage players to move towards zero emission vehicles." Meanwhile, both hybrids and EVs have gained traction in India. In FY25, 107,000 electric cars and 83,000 hybrid vehicles were sold, both growing 18% each.
Mint
06-06-2025
- Automotive
- Mint
Government supports all green mobility, says heavy industries minister Kumaraswamy
New Delhi: Union heavy industries and steel minister H.D. Kumaraswamy has weighed in on the automotive industry's concerns about state governments equating hybrid and electric car incentives, stating that the government continues to support all clean fuel for automobiles. He said the government has incentivized hybrid cars under subsidy schemes such as FAME II, and hybrid ambulances under PM E-drive. In addition, under the PLI-Auto scheme, the government supports all kinds of fuels besides EVs, including CNG, LNG and biofuels. "Under the FAME-II Scheme, EV (electric vehicles) and hybrid version of e-4W was allowed for incentivization. Similarly, in case of PM E-drive scheme, a hybrid version of e-ambulances, that is, electric plug-in hybrid & strong hybrid shall be incentivized," said Kumaraswamy in an email interview with Mint. Also read: Ola Electric's founder Bhavish Aggarwal pays ₹20 crore to top up collateral as shares slide "Further, besides EV, the government supports all kind of fuels viz. CNG, LNG, and bio-fuels under the PLI Auto Scheme," he added. FAME, or Faster Adoption and Manufacturing of Electric (and Hybrid) vehicles scheme, ran for two iterations from FY15 to FY19, and from FY20 to FY24. Currently, the PM E-drive scheme has replaced the FAME schemes. Under all these schemes, consumers could purchase electric vehicles at a subsidized price. The government then reimbursed manufacturers the difference. PLI-Auto is a ₹25,938-crore production-linked incentive scheme for automobiles and automotive components, announced in 2021. It provides incentives to automakers to manufacture vehicles that run on green fuel. Mint reported on 29 May that leading electric car makers Tata Motors Ltd, Mahindra and Mahindra Ltd and Hyundai Motor India Ltd are up in arms over the Delhi government's draft paper proposing equal incentives for hybrid cars and electric vehicles. On the issue of supply disruptions of rare earth magnets from China, the minister said the automotive industry has sought help from MHI, and that "MHI and the government of India" are actively working with industry stakeholders to understand the issue and find solutions. Kumaraswamy also said battery makers in the country have faced hurdles in meeting timelines under the production-linked incentive scheme for advanced chemical cells (PLI-ACC) due to unavailability of technology, skilled manpower, and upstream components, besides challenges in importing essential equipment and machinery. He clarified however, that by 2030, India will have indigenous ACC capacity of over 100 gigawatt-hours. Also read: Rahul Jacob: Manufacturing is crying out for a reality check "However, with support and hand holding M/s Ola Cell Technologies Private Limited (OCTPL) has reported successful installation of 1.4 GWh capacity," said the union minister. "Apart from the PLI beneficiary firms more than 10 companies have already started setting up cell manufacturing unit for more than 100 GWh capacity," he added. The problem echoes similar challenges faced by India's PLI scheme for solar modules, as Mint reported on Monday. The ₹18,100-crore PLI-ACC scheme was introduced in May 2021 to incentivize setting up of 50 gigawatt-hours of battery storage capacity. Three companies -- Rajesh Exports Ltd, Ola Electric Mobility Ltd, and Reliance Industries Ltd -- have been awarded 40 gigawatt-hour of storage capacity till date. This means the companies will receive benefits to set up every unit of battery capacity. Indian manufacturers are capitalizing on the heightened demand for cell components like Cathode active materials, Anode active material, aluminium and copper foils, with many companies setting up component manufacturing units in India to achieve higher value addition and strengthen supply chains. The ministry of heavy industries, which is also the nodal ministry for the PLI-Auto scheme, is expecting claims worth about ₹2,000 crore from the industry in FY26. Under the scheme, manufacturers have to claim incentives for the sales of zero-emission vehicles or other eligible components achieved in a fiscal year, in the following year. For instance, benefits for FY25 sales under the PLI-Auto scheme will be claimed and disbursed in FY26. Also read: India bulks up its drugs PLI scheme in renewed pushback against Chinese imports The expectation for FY26 claims come after a disbursal of ₹322 crore in FY25 to four manufacturers. This time, the minister said the government was expecting nine manufacturers to claim incentives under the PLI-Auto scheme. "Disbursal of incentive under PLI Auto is expected to increase over the years as the number of applicants achieving DVA certification increases as applicants are able to achieve localization as per scheme guidelines. Further, the applicants are expected to achieve DVA certification for more number of AAT products and variants. As more number of OEMs are likely to achieve DVA under the scheme in the coming years, the disbursal will rise in coming years," said Kumaraswamy. In FY26, state-run Bharat Heavy Electricals Ltd (BHEL) will aim to increase its revenue by 20-25% and double it's profits on the back of its existing orderbook of Vande Bharat trains, navy gun mounts, transmission lines, coal gasification projects, and boilers, the minister said. "In the current fiscal, BHEL is focused on consolidating project execution before expanding into newer domains," said the minister. 'We want BHEL to focus on delivery discipline first. Diversification into non-power sectors rail transport, defence systems, transmission and coal gasification will continue, and in some years, will contribute significant percentage of revenue." BHEL is also set to become the nodal agency for demand aggregation of electric vehicle charging infrastructure, and will develop an application to facilitate charging services, Mint reported on 21 May. On 2 June, the ministry notified the guidelines for the scheme to promote the manufacturing of electric passenger cars in India (SPMEPCI), which was launched in March 2024. The scheme allows foreign electric carmakers to import completely built-up units of their vehicles at a reduced import duty, in exchange for investing at least ₹4,150 crore towards manufacturing electric cars in India. They will be allowed to import 8,000 cars every year for five years at an import duty of 15%, as opposed to the 70% levy on imports otherwise. But electric carmakers have to achieve localization of 25% in three years, and 50% localization in five years to qualify for benefits under the scheme. Investments also have to be made in plant and machinery, electric vehicle charging systems, or research and development. American electric vehicle maker Tesla Inc. has not shown interest in the scheme yet, Kumaraswamy had said on 2 June in a press conference. But other manufacturers including Mercedes Benz, Hyundai, Kia, and Skoda-Volkswagen had shown interest in the scheme, he said.
