EV makers strike key policy victory as UP pulls plug on hybrid car incentives

The move marks a significant policy win for homegrown EV makers Tata Motors and Mahindra & Mahindra, and a setback for Japanese hybrid car manufacturers Toyota, Honda Cars, and Maruti Suzuki.

UP’s high-level empowered electric vehicle committee (HLEEVC), led by state chief secretary Shashi Prakash Goyal, took this decision at a meeting on 10 October.

“It was observed that incentives should be strategically implemented towards encouraging the indigenous manufacturing of pure electric vehicles and related technologies,” minutes of the meeting said. Mint has seen a copy of the document.

With the removal of hybrid incentives in UP, which accounted for around 10% of the 4.3 million cars sold in India in FY25, only Haryana and Chandigarh now have incentives for hybrids in place. Chhattisgarh and Rajasthan withdrew similar benefits earlier this year. Delhi’s policy, which proposes incentives for both EVs and hybrids, remains in draft stage.

In July last year, UP had decided to treat EVs and hybrids equally by waiving road and registration tax for both technologies—together worth around 10% of a vehicle’s ex-showroom price. The incentive has now been withdrawn for hybrid cars, effective 13 October.

“These (EVs) align more effectively with the state’s goals of energy security, sustainability, and progress towards a zero-emission future, rather than promoting strong hybrid technology, which represents an obsolescent transitional phase,” the committee discussed during the meeting.

The committee also highlighted in its observations that life-cycle emission assessments conducted by ICCT (International Council for Clean Transportation) and IIT Roorkee (2025) showed that battery electric vehicles (BEV) performed better than hybrids and “emitted approximately 70% less compared to conventional petrol vehicles”.

Impact on the ground

Based on the committee’s recommendations, the UP government introduced amendments to its EV policy of 2022 through an order on 17 October.

Earlier, it was mentioned that from the fourth and fifth year of the policy, only those EVs manufactured, purchased and registered in UP will be incentivised. EVs meant both pure EVs and hybrid electric vehicles.

As the state doesn’t have any car manufacturing plant, this meant virtually no EVs and hybrid vehicles would have been incentivised from next year.

But now with the amendments, only pure EVs registered in Uttar Pradesh will be incentivised, the committee said in its minutes of the meeting. The financial benefits will be offered regardless of where the cars are manufactured.

For hybrid car aficionados, this may mean shelling out more to buy their favourite vehicle. Prices of popular hybrid cars including Honda City, Toyota Innova Hycross, and Maruti Suzuki Grand Vitara could go up by as much as 10% in Uttar Pradesh, one of the largest markets for such cars after Maharashtra and Karnataka.

Rahul Bharti, senior executive officer, corporate affairs, Maruti Suzuki, said UP’s chief minister Yogi Adityanath had supported consumers of UP by allowing road tax waiver for both EV and strong hybrid EV.

“This was good for all: for the environment, for oil import reduction and for customers of UP. And even for UP state finances as hybrids contribute 20% SGST to the state,” he said, and appealed to the CM to continue incentives for hybrids in the future as well.

Tata Motors, Mahindra and Mahindra, Hyundai, Honda and Toyota did not respond immediately to a request for comment on the issue.

According to Amit Bhatt, managing director at ICCT, petrol-hybrid vehicles, often marketed as “strong hybrids” in India, are patented technologies that most Indian OEMs do not have access to, limiting domestic innovation and competitiveness.

“Hybrids remain a transitional technology, as the long-term goal is full electrification of transport. Therefore, this is the right time to focus policy and investment efforts on developing a robust ecosystem for electric mobility,” Bhatt added.

The background

Incentives for hybrid vehicles have been a sticking point in India’s automotive industry for some time now. Japanese companies, which have mastered this technology, have been lobbying the government for giving concessions to buyers of hybrid vehicles through lower taxation, direct subsidies to consumers, or the waiver of various state and central fees like registration charges.

However, rival companies led by domestic carmaker Tata Motors and Mahindra & Mahindra have strongly opposed any incentives to hybrid vehicles as they argue this hurts adoption of pure EVs.

In private conversations, industry executives have claimed that these carmakers are also worried that if incentivized, hybrid cars could eat into the sales of large diesel cars, which generate the bulk of their profits.

The issue came to a head this April when the Delhi state government proposed to subsidize hybrid cars on par with electric cars. A draft of the Delhi Electric Vehicles Policy 2.0 proposed waiver of road tax and registration fees on electric cars as well as hybrid cars priced up to ₹20 lakh ex-showroom.

While the proposal is yet to make it beyond the draft stage, it sent Indian carmakers into a tizzy, which moved various government bodies to lobby against a symbolic incentivization of hybrids on par with electric vehicles.