Mahindra & Mahindra's senior management on 4th November stated that the government's Goods and Services Tax (GST) reforms have clarified its stance on electric vehicles (EVs) in comparison with hybrids, ending speculation in the industry regarding subsidy priorities and technology direction.

"The current GST guidance has kind of clarified the government's position on it," said Rajesh Jejurikar, Executive Director and Chief Executive Officer of the Auto and Farm Sector at Mahindra & Mahindra. "The choice of what GST rates go to different products is reflective, we believe, of the government's position. So, at least in the near term, that debate is settled. There was uncertainty till the GST rate structuring was to come out, but that has now clarified the overall direction that is intended by way of priority."

Under the revised GST structure, electric passenger vehicles retain the 5% concessional GST rate. Hybrid vehicles have received partial relief. Small hybrids (under 1,200 cc petrol or 1,500 cc diesel and below four metres in length) will now attract 18% GST, while larger hybrids above those thresholds will fall under the 40% GST slab. For internal combustion engine (ICE) vehicles, the system has been simplified but remains tiered.

Mahindra & Mahindra's Group Chief Executive Officer and Managing Director, Anish Shah, commented that the company considers EVs to be the "technology for the future," in line with the government's stated plans.

"Hybrid is, in a sense, an interim technology. The government has made a set of decisions in the GST programme not to incentivise this, and we think that's a fair decision," Shah said. "A hybrid without a charging infrastructure is largely closer to ICE. You need to be able to build charging infrastructure and EVs to set up India for manufacturing for the world, and that is the path we are on."

Regarding government subsidies for EVs, Shah stated: "We are ready to make vehicles that are required by the market based on subsidies that may be available. But, largely, we feel that the government should not be subsidising vehicles in the long term. EVs are on a path where subsidies are needed only for the transition. Over time, we won't need them."

Position on CAFE 3 norms

Jejurikar stated that the company is monitoring the draft Corporate Average Fuel Economy (CAFE 3) norms and expects them to align with India's stated EV-focused mobility plans. "The CAFE 3 is at a very early stage of draft discussion. SIAM is deliberating different points of view, and we believe the right approach is to align CAFE 3 design with the rest of the journey, which is EV as the primary destination, as reflected in the GST structuring," he said.

Jejurikar added: "We will be ready in a manner that allows us to meet the expectations set under the upcoming CAFE 3 norms. We're already working toward that, having invested significantly in our EV journey. We feel comfortable that we should be able to comply with the new requirements once they come into effect."

In September, the Bureau of Energy Efficiency issued a revised draft of the CAFE 3 norms, proposing stricter average CO₂ emission requirements from April 2027, while offering relief for sub-four-metre petrol cars. The proposal includes incentives for electric vehicles and range-extender hybrid electric (REE) vehicles at the same level, along with separate incentives for plug-in hybrid, strong hybrid, and flex-fuel vehicles.