Finance Minister Pranab Mukherjee's budget proposal of custom duty exemption on specified parts of hybrid cars has done little to enthuse the industry.
Japanese auto major Toyota does not find much to cheer about. The company imports the environment-friendly vehicle as completely built units (CBU). “It is a good step to encourage hybrid vehicle sales in India. But this will have no impact on our business,” said Sandeep Singh, deputy managing director, marketing, Toyota Kirloskar Motor, adding there was no plan of revising the price as of now, as the sops will not allow to do so.
The company, which launched Toyota Prius, the world’s largest selling hybrid, last March, is currently priced Rs 28.4 lakh (ex-showroom, Delhi) and has sold 135 units since the introduction. “We launched the Pirus to introduce the latest technology in Indian market. Selling volume never was a target.
The hybrid vehicles are well revived in developed economies like the US and Japan. The hybrid market in India has a long way to go,” he said. However, Singh noted that given the spiraling prices of conventional fuel, hybrid is the best alternative in India.
Honda, which launched Honda Civic hybrid in 2008, a first-of-its-kind, had to stop selling the cars because of cost-ineffectiveness. The company. Too, is also not fancied by the sops and is not considering to re-introduce hybrid cars in India.
“The exemption is on import of parts. One can see the impact if you import and assemble the parts here. But at present we don't have the infrastructure here for that. We can only import hybrids as completely built units and do not have any current plans of re-introducing into the segment,” said Janeswar Sen, vice-president (sales and marketing), Honda Car India.
At present, custom and other duties on imports of completely built hybrids are about 100 per cent, which has made it beyond the reach of customers.
The finance minister also announced a concessional rate of excise duty of five per cent to incentivise the domestic production.
“The budget declaration is a welcome step for promoting domestic production of hybrid cars. We do not have any current plans of manufacturing hybrid cars in India. We manufacture hybrids from one plant in Japan and will continue to do so,” Sen said.
Japanese player Honda was the first to launch the hybrid with Honda Civic Hybrid in 2008 at an initial price of Rs 21.5 lakh. Later, the price was brought down to Rs 13.36 lakh as the company wanted to sell out the imported stock, but finally they stopped selling the car due to cost ineffectiveness.
Hybrid cars, which are seen to be a solution to high fuel prices and environment pollution, offer better mileage and lower emission as they run on electricity charged battery after gathering certain speed.
According to Kapil Arora, automobile industry analyst, Ernst & Young, the budget sops for hybrid cars may not have any impact in the short term, but it is certainly a step in the direction to incentivise greater adoption of this kind of technology.
Citing the example of the US, where the users of such cars enjoys tax relief, Arora said, “If the government wants to encourage the use of hybrid cars, it has to incentivise the customers. But it will take time. For the next three to five years cars run by conventional fuel will continue to dominate. It will take another five to eight years to make the alternatives commercially viable in Indian market.”
