Govt proposes incentives to boost EV sales in 5 years

New Delhi: The ministry of road transport and highways has formulated a list of non-fiscal incentives to ensure that electric vehicles (EVs) account for 15% of total vehicle sales in the next five years, Union minister for road transport, highways and shipping, Nitin Gadkari, said at the 58th annual convention of the Society of Indian Automobile Manufacturers (Siam).

This would entail a quantum leap in the sales of electric vehicles, which now forms less than 1% of total vehicle sales in the country.

The government also plans to establish compressed natural gas (CNG) dispensing stations in 300 districts to further push for the manufacture of vehicles running on clean energy.

Gadkari also said that electric and CNG-powered vehicles will be exempt from road permits to promote their usage.

“Electric vehicles attract 12% GST and no further subsidies are needed and we don’t have any intention of subsidizing personal vehicles. The non-fiscal incentives that we will announce will increase sales of electric vehicles to 15% of total sales. There is no need for automobile companies to ask for incentives any more. They should rather develop a pool of drivers to enhance skill development,” said Gadkari.

As electric mobility will take some time to develop in India, in the short term the Union government is focussing on increasing the supply of CNG to push vehicle manufacturers away from the development of vehicles that run on diesel and petrol. This is significant as the availability of CNG has been a major obstacle for increasing sales of such vehicles.

To give sales of CNG vehicles a fillip, the Union government will establish CNG stations in 300 districts and increase the number of fuel stations to 10,000 from just 1,400 at present, the Union minister for petroleum and natural gas, Dharmendra Pradhan, said at the same event.

Maruti Suzuki India Ltd, the largest carmaker in the country, will be the biggest beneficiary of this decision as the company has several models, including Alto, Wagon R, Celerio, Dzire and Carry, that come fitted with CNG engines. These vehicles account for less than 10% of total vehicles sold by the company but the announcement by the government has the potential to boost the vehicles sales of Maruti in the long run, especially because of its extensive dealer network in semi urban and rural markets.

“CNG cars are cheaper than petrol- and diesel-driven cars, and on 14 May this year the Union government started this initiative to establish 10,000 CNG pumps in 300 districts. We will also ensure that BS VI fuel is available across the country from April 2020 and auto companies can plan for the next 10 years as there will be no uncertainty,” said Pradhan.

The automobile industry has given a thumbs-up to the announcements made by the government to push electric vehicles.

Pawan Goenka, managing director, Mahindra and Mahindra (M&M), said it is a huge boost for electric mobility in India and it will be disappointing if sales of electric vehicles do not pick up now.

“The announcements are good for the electric vehicle industry and if the permit is not there, then it will help the sales to go up. With CNG, the only constraint was availability and the announcements by the minister about making CNG available in 300 districts means sales will go up,” said Goenka.

“It was pleasant to receive positive signals from the government on electric vehicles and about their support to the automobile industry. With Audi’s global focus on electric mobility our project ‘Electrified India’ is already underway and we are in a position to launch the ‘Audi Etron’ in 2019-2020 subject to conducive market conditions,” said Rahil Ansari, head, Audi India.