Business News/ Companies / News/  GST reduction and other benefits have created the right framework for EVs in India: Mercedes-Benz

New Delhi: The Indian government’s decision to reduce Goods and Services Tax levied on electric cars to just 5% and the other incentives being offered by the state governments will help automobile manufacturers launch more electric vehicles in the domestic market, said Martin Schwenk, managing director, Mercedes-Benz India Pvt Ltd in an interview.

These policy measures have started creating an enabling framework needed to kick start the adoption of electric mobility in India, he added. The German vehicle maker, on Thursday, became the first luxury car maker and overall the third Original Equipment Manufacturer (OEM) to launch a battery powered electric car in India after Hyundai Motor India Ltd and M G Motor India Ltd.

The Naredra Modi led government has been urging vehicle manufacturers to increase production and sales of electric vehicles to reduce vehicular pollution in major cities and curb dependence on crude imports.

It also plans to develop India as hub for manufacturing and exports of electric vehicles and related components like Lithuim ion batteries and cells. Niti Aayog, government’s policy think tank, is working with different ministries to develop Giga Factories for Lithuim-ion batteries in India, on the lines of what Testla did in the United States.

To attract foreign investments in electric vehicle technology and reduce the cost of ownership, goods and services tax levied on such zero emission vehicles has also been reduced to 5% from 12% in 2019.

“The tax incentive is definitely an enabler for developing electric space in India. That’s true for all manufacturers and I would hope that there will be some consistency on these policies overtime because it will help develop a stronger foot print and increase localization and adoption of electric vehicles," said Schwenk.

“We now have the advantage on the customer side for the reduced GST. Whilst a similar car would have attracted 50%, for electric it is just 5%. Some states exempt the road tax and that helps bring down the on road price. We also believe that we will have the first mover benefit," said Schwenk.

In 2019, Indian government earmarked 10000 crore to encourage development, manufacturing and usage of electric vehicles in the domestic market though the second phase of the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme.

On Thursday, Mercedes-Benz launched its first electric vehicle in India, named EQC at a price of 99.30 lakh. The new offering will be available at 13 dealerships across six cities, Delhi, Mumbai, Bangalore, Hyderabad, Chennai and Pune.

The company will also provide a warranty for 8 years or 1.60 lakh kilometers on the lithiuim-ion battery and an assured buy back value after three years of purchase. It will also install chargers at the residences and office spaces of all prospective customers.

According to Schwenk, the EQ brand will have room for other electric cars as well and more products will be introduced in the coming years as part of the parent company’s plan to move to sustainable mobility.

“Whether we would locally produce or import it will depend upon the framework (related to EVs) and customer expectations," he added.

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Updated: 08 Oct 2020, 07:16 PM IST
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