2017-08-02
With EV related FAME policy framework expiring next month, players await fresh triggers

The country’s electric mobility is still at crossroads, awaiting the right triggers. Domestic players, global automotive firms, including over half a dozen Chinese Electric Vehicle (EV) majors are closely watching for policy moves, which could provide that necessary spark.

While the sector believes that electric mobility has massive potential, it is pinning its hopes on early strategic changes in policy. Sources point out that the Union Cabinet will soon take a call on the issue. After all, Niti Aayog has estimated that India can save up to 64 per cent of energy demand for road transportation and 37 per cent of carbon emissions by 2030 if it works towards a shared electric mobility future.

Sohinder Gill, Director Corporate Affairs at the Society of Manufacturers of Electric Vehicles (SMEV), feels that the tweaking in policy could include removing anomalies in the taxation structure in the GST regime for lead acid and lithium ion batteries, the key input for electric vehicles.

“Over the years, the key regulating point has changed,” says Gill.“It was the Department of Heavy Industries, then the Ministry of New and Renewable Energy and now Niti Aayog, with whom we have had regular interactions. The importance of these meetings can be gauged from the number of players who take part. And our fervent plea has been to continue the FAME regulations.”

FAME or Faster Adoption and Manufacturing of Electric and Hybrid Vehicles India policy unveiled by the Centre in April 2015 as a part of the National Electric Mobility Mission Plan, has been a major step to create an ecosystem for faster adoption of green vehicles.

“However, this expires in september 2017,” he says. “We have been interacting with Niti Aayog, requesting them to remove the uncertainty with regard to its continuation.” The French government and the United Kingdom have already announced that they would work towards no fossil fuel powered vehicles by 2040 and India has set an ambitious target of going the electric mobility way by 2030. If India has to achieve this, it has to provide the right triggers, Gill points out.

“There are only a few weeks left for extension of the benefits beyond September. Worst thing that can happen for the existing plans of manufacturers is that the incentives now offered are abruptly stopped,” Gill says.

Policy related issues

The implementation of GST impacts the battery segment that supports the EV sector. The tax impost varies from 12 to 28 per cent. While lead acid and lithium ion batteries attract 12 per cent respectively, when fitted into a EV, it become 28 per cent. “While our aspiration is to make this zero, the immediate requirement is to bring it down to 12 per cent,” he says.

There are also issues with the road tax as it varies from State to State. Just imagine the prospect of purchasing an electric two-wheeler for ₹60,000 to ₹80,000 and running it for 20,000 km per year and say about one lakh km over five years without having to spend a rupee on fuel, except basic charging and other items, which require periodic maintenance. This will be a compelling proposition for any buyer, Gill says.

“We are foreseeing a situation soon where most of the last mile connectivity in metros could be provided by electric vehicles and all e-commerce players consider using EVs for last mile transport,” he says. “State Governments could also deploy EVs for transport to airports and other key public locations.”