Honda hybrid cars, Honda EV
Honda Motor displays Honda Sports EV Concept during media preview of the 45th Tokyo Motor Show in Tokyo.Reuters/TORU HANAI

Japanese carmaker Honda could be mulling over making cheaper hybrid cars for markets like India, suggest emerging reports.

With the pan India Goods and Services Tax (GST) taking the cost of the hybrid cars much higher, carmakers have been caught in two minds: one is to offer alternative options, and other is to withdraw the models from the market alltogether. The first option seems to be appealing considering the possibilities a price sensitive country like India offers.

A report of ET Auto says that the automaker like Honda could make cheaper hybrid cars for a price- sensitive markets like India. Under GST, the central government has levied the highest tax rate on hybrid vehicles. Hybrid vehicles attract a total levy of 43 percent (28 percent tax and 15 percent cess).

"Hybrids can be used with the existing infrastructure. Our purpose is to come up with hybrid vehicles that customers can choose, including the price," the publication quoted Takahiro Hachigo, president & CEO of Honda Motor Company. He also added that "We have sold over two million hybrid vehicles but when it comes to India, we still do not know to what extent hybrids can grow and nor do we understand how much electric vehicles are likely to increase."

Also read: India's ambitious EV push: Are we ready? Challenges and roadblocks galore

The production of Camry hybrid at its dedicated Bengaluru assembly line was halted after the demand for the model took a hit owing to GST and additional cess. The Camry hybrid is not in production since September as its sales fell by 73 percent as against the corresponding month a year ago.

The government of India also continues to push for vehicles that run on electricity and alternate energy. India plans to go all-electric by 2030.