Karnataka plans to push the sales in the clean mobility space with this initiative
Karnataka, one of India’s leading states in electric vehicle adoption, is poised to introduce a comprehensive policy aimed at promoting clean mobility. The draft of the state’s new policy reveals plans to offer significant tax cuts for hybrid vehicles and provide financial incentives to companies operating in the clean mobility sector, including manufacturers of EVs and their components.
The proposed move marks a notable shift from India’s current emphasis on fully electric vehicles, adding hybrid cars into the mix. This development could benefit automakers like Toyota, which has been lobbying for greater support for hybrid technology in India. Karnataka’s initiative could make it the second state, after Uttar Pradesh, to offer tax breaks for hybrid vehicles. The policy suggests the removal of road tax and registration charges for hybrid cars priced below Rs. 25 lakhs, which currently attract levies ranging from 13% to 18%.
A Boost for Hybrid Cars
While India has largely prioritised electric vehicles in its clean mobility initiatives, Karnataka’s new proposal introduces hybrid cars as a viable alternative. This is significant as hybrid vehicles, particularly those from Toyota, combine gasoline engines with electric power, reducing emissions without the full dependency on charging infrastructure. The plan to lower taxes on hybrid cars could provide a fresh boost for the segment, which has lagged behind EVs in terms of policy incentives.
However, the move is not without contention. Rival automakers like Tata Motors and Mahindra, which are heavily invested in EV development, have voiced concerns that promoting hybrids may dilute India’s focus on full electrification. Both companies have emphasised that incentives should remain focused on electric vehicles to align with the country’s goal of increasing EV sales and reducing dependence on fossil fuels.
Incentives for the Clean Mobility Sector
In addition to the proposed tax cuts for hybrids, Karnataka’s draft policy outlines a series of financial incentives for manufacturers of EVs, their components and charging infrastructure. Companies investing in the clean mobility sector could receive incentives ranging from 15% to 25% of their capital investments, depending on the size of the investment and the number of jobs created.
The state’s plan covers both new factories and expansions of existing facilities, targeting key areas such as battery manufacturing and EV charging gear production. This could further boost Karnataka’s standing as a hub for clean mobility technology, particularly in the wake of the state’s previous announcement of a goal to attract up to $6 billion in clean mobility investments.
State-Level Competition for EV Investments
Karnataka’s proposed policy comes at a time when Indian states are actively competing to attract investments in the EV sector. With Prime Minister Narendra Modi’s government pushing for increased EV adoption as part of the country’s strategy to combat pollution and reduce reliance on imported oil, several states have rolled out incentives for companies producing electric vehicles and related infrastructure.
India’s overall car sales in the 2023/24 financial year reached 4.2 million units but hybrids and EVs accounted for fewer than 1,00,000 units each. The national target is to boost the share of fully electric vehicles to 30% of new car sales by 2030, a goal that will require coordinated efforts from both the central and state governments.
Looking Ahead
Karnataka’s clean mobility policy, once finalised, could offer a new model for balancing the promotion of both hybrid and fully electric vehicles. By broadening the scope of clean mobility beyond just EVs, the state aims to accelerate the adoption of green vehicles while addressing concerns over infrastructure readiness for widespread EV use. At the same time, the policy will likely intensify the debate among industry stakeholders about the best path forward for India’s automotive future.
As the state prepares to finalise and unveil its new clean mobility policy, industry players and environmental advocates alike will be watching closely to see how Karnataka’s approach impacts the broader shift toward sustainable transportation in India.
