The government is planning to incentivize the purchase of electric vehicles (EVs) with rebates of up to Rs 50,000, bringing them under the umbrella of priority sector lending and lowering interest rates on loans, said an official with knowledge of the matter. The move is part of the government’s bid to promote the manufacture and sale of EVs in India so that they eventually comprise 15% of total sales from the current negligible share in the next five years.
A cabinet note is being prepared and a decision is expected soon, the senior government official told ET on condition of anonymity. “The idea is to give enough incentives so that the prices of electric vehicles match the current conventional internal combustion engines so that prospective buyers start giving preferences to electric vehicles over conventional vehicles,” the person said. The plan could be rolled out in select cities for a fixed tenure in the first phase, said the person cited above. The sops may be linked to battery size and vehicle type. India is banking on cleaner energy sources to help clean up its polluted cities.
Extensive infrastructure development will be needed to provide adequate charging facilities to ensure this isn’t a constraint for adoption, the official said. Stakeholder ministries have already issued notifications to facilitate the domestic manufacture of EVs and creation of infrastructure, following intervention by the Prime Minister’s Office (PMO).
“This could be clubbed with waiving of road and registration taxes by states and partial or complete exemption from parking charges for electric vehicles, resulting in substantial savings for EV buyers,” the official said.
The single biggest factor for slow penetration of electric vehicles is their high price, which is around 2 to 2.5 times more than a comparable conventional vehicle, according to the Society of Indian Automobile Manufacturers (SIAM). Another concern is the range per charge. That’s despite electric vehicles having a significant advantage in terms of operating cost, which could be as low as one-fourth that of a conventional vehicle.
Total electric vehicle sales in India in FY18 amounted to 56,000 units, up from 25,000 in FY17. Of this, electric two-wheelers dominated with 54,800 units, up from 23,000 in the previous fiscal. However, electric four-wheelers witnessed a drop in FY18 to 1,200 units from 2,000. SIAM data show total passenger vehicles sold in India in FY18 stood at 3.3 million units while total two-wheeler sales amounted to 2.02 million units.
The department of revenue had on January 29 calibrated basic customs duty and goods and services tax (GST) rates on electric vehicles to make them competitive and lowered duties on raw materials imported for manufacturing components. Besides, the ministry of power has issued guidelines for facilitating the establishment of charging stations and subsidized rates of electricity across cities and highways. The ministry of housing and urban affairs has notified amendments to the building code and to allow EV charging stations in buildings.
Banks are required to allocate a certain proportion of their credit to the priority sector. These include agriculture, small and medium enterprises and education among others.
Source- The Economic Times