UP Abolishes Road Tax for Hybrid and Electric VehiclesUP Abolishes Road Tax for Hybrid and Electric Vehicles In a bid to promote cleaner transportation and reduce pollution, the Uttar Pradesh government has announced a complete waiver of road tax for hybrid and electric cars. This move aligns with India’s goal of achieving net-zero emissions by 2070. The waiver aims to encourage the adoption of eco-friendly vehicles by making them more affordable for consumers. This is expected to benefit automakers such as Maruti Suzuki, Honda Cars India, and Toyota Kirloskar Motor, as they offer popular hybrid models like the Grand Vitara, Invicto, Hyryder, and Innova Hycross. The government’s policy provides a “100 per cent waiver of registration fees for high-performance hybrid electric vehicles and plug-in hybrid electric vehicles.” Previously, UP levied 8-10% road tax on vehicles, depending on their cost. Industry experts believe that this initiative could boost the hybrid market in India, which is growing steadily. However, some concerns have been raised regarding potential “leakage” of vehicles registered in UP to neighboring states. The waiver is seen as a positive step in promoting sustainable transportation, reducing dependence on fossil fuels, and attracting investments in EV infrastructure and manufacturing. It is expected to lead to increased EV sales, create new employment opportunities, and establish Uttar Pradesh as a hub for the green mobility industry.
The Uttar Pradesh government has announced a complete road tax waiver for hybrid and electric cars. Nand Gopal Gupta, Minister of Industrial Development, Export Promotion and NRI & Investment Promotion, told News18 that the initiative aims to promote cleaner transport and reduce pollution, towards achieving net-zero emissions by 2070.
He stressed, “The decision to abolish off-road tax for hybrid and electric vehicles has been taken to encourage cleaner transportation and reduce pollution. This move reflects our efforts towards sustainable growth and supports India’s goal of achieving net zero carbon emissions by 2070. By promoting eco-friendly vehicles, we aim to reduce dependence on fossil fuels, improve air quality and boost the local economy by attracting more investments in EV infrastructure and manufacturing. This initiative is likely to increase EV sales, create employment opportunities and establish Uttar Pradesh as a major player in the green mobility industry.”
The Federation of Automobile Dealers Associations (FADA) has reported that UP is one of the largest passenger vehicle markets in India. This significant step by the UP government to encourage adoption of eco-friendly vehicles by announcing complete exemption from registration tax on high-performance hybrid cars is expected to benefit companies like Maruti Suzuki India, Honda Cars India and Toyota Kirloskar Motor with customers potentially saving nearly Rs 4 lakh. The exemption will be applicable to popular models like Maruti Suzuki’s Grand Vitara and Invicto, Toyota’s Hyryder and Innova Hycross and other high-performance hybrid vehicles.
According to the government, the policy provides for a “100 per cent waiver of registration fees for high-performance hybrid electric vehicles and plug-in hybrid electric vehicles” which will be effective immediately. Earlier, the UP government levied 8 per cent road tax on vehicles priced below Rs 10 lakh and 10 per cent on vehicles costing more than Rs 10 lakh (ex-showroom).
Rajat Mahajan, Partner, Deloitte India, told News18 that India’s robust hybrid market is still in its nascent stages but is growing rapidly. It has grown from 0.5 percent market share in 2022 to 2.5 percent in Q1 2024.
He said, “When you compare it with EVs that have a 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. The GST on hybrids is still 43 per cent compared to 5 per cent for EVs, despite the overall volume of hybrids and EVs being similar.”
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“The recent circular by the UP government to waive off-road tax for high-performance hybrids and plug-in hybrids is a welcome move and may lead to an increase in the sales of such vehicles. However, this may also lead to some leakage in neighbouring states as people register their cars in UP and then travel outside,” Mahajan added.
However, according to him, UP is a big state contributing 10 percent to the total PV sales and can also lead the way for other states if the adoption is good. “Although the 3 leading Japanese players currently have the relevant hybrid line-up, we can expect other OEMs to follow this path as well given the growth,” Mahajan said.
Jitendra Patil, Managing Director of Pune-based energy technology company ARENQ, added that the state government’s decision to waive registration fees for hybrid vehicles is a major step forward in promoting clean transportation. “This will not only make hybrid cars more accessible to eco-conscious drivers but also pave the way for wider adoption in the state. Arenq is committed to supporting the growth of the Indian EV market and we believe this initiative will create a positive domino effect and encourage other states to implement similar policies,” Patil said.
Raghav Arora, Co-Founder and CTO at Statiq said, “It is a significant step towards promoting eco-friendly cars. As an EV charging company, we welcome this initiative to make sustainable vehicles more accessible. This proactive government effort will encourage people to switch to EVs, in line with India’s broader goals of reducing carbon emissions and promoting adoption of green technology.”
