Waiting in line

New Delhi, Feb. 27: The budget is likely to announce sops to promote the use of environment-friendly hybrid cars, which run both on fuel and batteries.

In addition, the heavy industries ministry will move the cabinet for a panel to make recommendations on promoting the use of hybrids. Car makers such as Rolls-Royce, Toyota Motors and Mahindra & Mahindra are keen to enter the segment and are awaiting the government’s policy.

The policy is likely to give incentives to domestic research and development and provide fiscal sops.

“Besides manufacturing and development related incentives, the policy will also address the need for sops in infrastructure promotion in the domestic market,” sources said.

The batteries for the cars are charged by electricity, for which outlets need to be set up.

At present, the few hybrids launched in India by Honda and Toyota are imported as completely built units. The high customs duty makes them beyond the reach of many.

Import duties on hybrid cars increase the price by 25 per cent compared with imported cars with petrol and diesel engines, which attract duties ranging from 10 per cent (for small cars) to 22 per cent for sedans.

According to Japanese player Honda, the stiff import duty should be lowered, at least for green technology vehicles such as the hybrids.

Honda had introduced the Honda Civic Hybrid at an initial price of Rs 21.5 lakh in 2008, but sales have not been very encouraging.

Last year, Toyota introduced the Prius — the world’s largest selling hybrid car in India — at Rs 26.55 lakh. However, sales have been dismal. In January, Toyota sold just one Prius, while 13 were sold in December.

Analysts said if prices were brought down to reasonable levels, hybrid cars could be the solution to increasing petrol prices and global warming.

“A comprehensive policy is critical if hybrid cars were to become successful in India,” said an industry player.

Car makers sold 184,332 units in January compared with 145,971 units a year earlier, beating the previous high sales of 182,992 cars last October.