KATHMANDU: While hybrid electric cars have been speedily gaining popularity in the international automotive market with high hopes that the latest technology clean machines will outpace gas-guzzlers, Nepal is nowhere on track to encourage these environment friendly and fuel efficient cars. Today, paying due heed to the growing fuel crisis and climate change, carmakers are shifting focus to these hybrid electric vehicles and most countries encourage and provide tax rebates on these vehicles.
Unfortunately, it seems Nepal does not realise the essence of hybrid cars, thus there is no difference between the import duties on hybrid cars and other normal cars. Nepal’s once vibrant and booming domestic automobile market came to the crossroads after the annual budget of 2009-2010 placed a hefty 240 per cent import duty, which is one of the highest in the world, on auto-mobile imports. The same tax structure is imposed even on hybrid cars, while even neighbouring countries like Sri Lanka, Bangladesh, Bhutan and India offer incentives through tax rebates on such cars. Toyota and Honda have one hybrid car each in the domestic market — Prius and Insight respectively. However, these cars will never get the opportunity to prove themselves because of taxes and a government that refuses to see the logic.
“The major discouraging factor for hybrid cars in Nepal is the hefty import tax structure, which is equivalent to other gas-guzzlers,” said Ritu Vaidya, managing director of Industries and Trade at Vaidya’s Organ-isation of Industries and Trading Houses, parent company of United Traders Syndicate, authorised distributor of Toyota Motors.
Citing that hybrid cars are much more suitable for a country like Nepal, she said, “The government should impose a nominal import duty of 20 per cent on the hybrid cars so that people are encouraged to shift to hybrid cars as it helps control fuel consumption and preserve the environment.”
According to Vaidya, Toyota’s new hybrid car — Prius — is waiting for the new fiscal budget to provide some consideration and change in tax structure. “Hybrid cars will be most preferred modes of transport around the world in days to come as these vehicles are future-
oriented,” she said, adding that they are expecting much from Prius, since there is a certain group of people who are aware about the essence of hybrid cars, fuel crisis and climate change.
“The Honda hybrid that was first imported into Nepal provides 30 km per litre, auto-matically charges the battery and switches to battery when required. This is the technology of the future that should be promoted in Nepal too.
We’ve been lobbying for this with the government, but this is an ongoing process and they don’t seem to want to understand,” says Saurabh Jyoti, president of Nepal Automobile Dealers’ Association (NADA).
Akash Golchha, executive director of Golchha Organisation, parent company of GO Automobiles, authorised distributor of Ford, said, “The government should offer some tax rebate on the import of hybrid cars to encourage the use of such cars,” stressing that the government needs to reduce the taxes on the import of other vehicles as well. “We don’t have any plans so far to introduce hybrid car at the moment, but we may introduce one or two in future,” he said, adding that there has to be some sort of feasibility study before launching the car in the country. Meanwhile, Nirakar Shrestha, managing director of Laxmi Inter-continental, the sole authorised distributor of Hyundai, opines that the future of automotive market is in hybrid cars, as these cars are efficient — in terms of environmental conservation and fuel consumption control. “The government needs to provide some sort of tax rebate on hybrid cars and also review the existing taxation on the import of auto-
mobiles as well,” he said. He informed that once Hyundai’s hybrid cars come to India, they will bring it to Nepal also.
But hybrids may never truly hit the roads in Nepal as forward thinking is rare when it comes to the government agencies. “Honda has a more
affordable hybrid, but its cost is almost three times that of a similar petrol guzzler. Under the present tax system, it is ridiculous to try and sell such vehicles because it won’t work,” said Jyoti, adding that the government should reduce the duty on such
hybrids or treat them within the framework that currently exists for electric vehicles. Jyoti says that revenue should not be the government’s only criteria. Long-term returns to the country should also be considered as such vehicles are environment friendly and could save the country’s foreign exchange spent on import of fuel.
Although the government is aware about the essence of hybrid cars, it is still not in the mood to consider it as a better option than
other cars. “We are acquainted with the essence of hybrid cars, but still we are not in a condition to encourage these cars,” said
Krishna Hari Baskota, secretary at the Finance Ministry, stressing that the government still considers automobile as a luxury commodity rather than a necessity. When asked about the probability of deduction in the existing taxation on import of vehicles, he said, “The only possibility of any change in tax structure is for it to go higher.” Citing that since the country is not experiencing economic progress, he said the government has to discourage the imports of luxury goods in such a situation.