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In order to boost eco-friendly hybrid cars, the government is planning to slash excise and customs duties on such vehicles. The move is to encourage the use of alternative sources of fuel.

At present, Honda Civic is the only hybrid version in the country. Several other manufacturers like Mahindra and Tatas are planning to join the race soon with hybrid variants of Scorpio and Indica, respectively, next year. Toyota is also likely to come out with its hybrid variant of Prius.

Policy makers are examining the proposal to encourage use of such cars that run both on fossil fuel and electric battery in the country. As per the proposal mooted by the Department of Heavy Industries, excise duty on such cars should be reduced to 12% from existing 14%. It has also demanded a reduction in customs duty which is over 100% on such imports.

Hybrid cars receive a favourable tax treatment in other countries as they consume less fossil fuel. Honda Civic, the only hybrid car available in the domestic market is currently being imported as a completely built unit (CBU) attracting an import duty of 104%.

In the international market popular hybrid brands are priced in the $18,000-$30,000 range. The cars produced in India will be much cheaper and more so if a favourable tax treatment is given.

According to recent statistics, there are close to 51 lakh petrol cars on Indian roads, consuming around 315 crore litre of petrol a year. Introduction of hybrid cars in the market can bring it down.