India’s Lack of Clear Policy Hinders Introduction of Eco-friendly Technology, says Honda

Japanese auto giant Honda says that India´s lack of a clear policy can be a hindrance to introducing eco-friendly automotive technologies to India.

Honda has recently announced that they are working towards making 65% of their production non-conventional – either hybrid, plug-in, electric or fuel cell vehicles by 2030. However, their plans in India with regards to selling hybrid are likely to be confined to sales for technology demonstration, considering that heavy taxes are affecting volumes.

Honda Cars India Ltd (HCIL) Senior VP and Director Marketing and Sales Rajesh Goel told The Economic Times that because of their plan for mostly non-conventional production by 2030, they are well equipped with the technology, but he added, “The issue is that everything entails investments. Unless the policy framework in India is clear for us to be able to decide what and when to get in terms of concrete plans, there is an issue.”

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“Other than that (policy framework), for us to get a technology here, be it hybrid or electric, is absolutely no problem because we are running similar programs for other countries. So just to adapt one, in terms of technology we have everything available,” Goel added.

Goel also said that if no other hitches are there, then the lack of a policy can still be dealt with. He informed that the auto industry is discussing with the government in order to arrive at a mandate regarding eco-friendly vehicles.

“I am sure that industry views will be taken and we are participating in those forums,” Goel said.

Honda Accord hybrid sales in India have recently gone down after GST-induced price hikes. Honda Accord hybrid is imported from Thailand in completely built units. “We have suffered a dent in volumes as it has a huge impact on price,” Goel said.

As of last year, the government had declared its plans to move towards 100% electric vehicles (EV) in public transport and 40% in personal vehicles by 2030. However, it has refrained from coming up with an EV policy with the argument that rules and regulations shouldn’t confine technology.

GST results in a total of 43% tax incidence on hybrid vehicles. This has led to a hike in prices, for example, Honda Accord hybrid has gone up by INR 5 lakh, its price now quoted as INR 43.21 lakh. While Honda will continue to sell the model in India, they will be keeping their volumes low.

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Currently, Honda is only importing hybrid cars into India, thirty cars at a time, that too after confirmed orders. Goel said the number of sales has dipped after price hikes, “We are not even close to three digits (annually). The number has fallen purely because of increased prices… Even for moneyed people that level of jump is difficult to digest.”

Apart from the Honda Accord, which was brought to India in 2001, the eco-friendly auto consumer has several snazzy choices in hybrid vehicles. While the Honda Accord is priced at around INR 43.21 lakh, the Toyota Camry is priced at INR 42.73 lakh. The BMW i8, with a three-cylinder petrol engine for the rear wheel, comes dear at INR 302.77 lakh, but with breathtaking curves.

Sedans within a more affordable price range include Maruti Suzuki’s Ciaz, which is a part of Maruti’s Smart Hybrid Vehicle from Suzuki (SHVS). With prices starting from INR 8.71 lakh the Ciaz is doing quite well in this segment. Another Maruti product starting from INR 7.08 lakh, the Maruti Suzuki Ertiga, has similar technology to the Ciaz.

Choices in hybrid SUVs include the Volvo XC90, known for its safety features, prices starting at INR 90.44 lakh. Also, equipped with Mahindra’s ‘intelli-hybrid’ technology, comes the Mahindra Scorpio, at the base price of INR 11.59 lakh, and the Mahindra TUV300 at INR 8.91 lakh.

While the government’s draft of National Auto Policy was released for review among auto industry experts in February this year, the tax rates have not been friendly. For Indian consumers to opt for environment-friendly cars, the options need to be attractive as well as convenient. In the absence of this, India’s plans of becoming predominantly eco-friendlier by 2030 are still distant.