Good news for Mahindra, Tata Motors: Govt plans Rs 13,600-cr thrust for electric & hybrid vehicles

Written by Subhash Narayan | New Delhi | Updated: Jul 7 2014, 13:50pm hrs
Hybrid carThe move will provide a big boost to the auto industry to generate demand in an alternative market segment and beat the slowdown.
The government intends to provide subsidy to the tune of Rs 13,600 crore between now and 2020 to roll out the ambitious programme of popularising electric and hybrid vehicles in the country under the National Electric Mobility Mission Plan (NEMMP) unveiled by former prime minister Manmohan Singh in 2013.

The move will provide a big boost to the auto industry to generate demand in an alternative market segment and beat the slowdown. Apart from companies like Mahindra Reva, which has already set up a capacity of 40,000 units of electric cars per year, companies like Tata Motors and Maruti Suzuki are working on both hybrid and electric models for India. Kinetic is also developing a three wheeler while TVS and Bajaj Auto are working on hybrid motorcycles.

Sources said that the National Board of Electric Mobility in its meeting held last month approved the funding structure of the electric mobility plan and the department of heavy industries would now take cabinet approval to the proposal before implementing the scheme.

The expectation is that the scheme would kick in from as early as August this year giving ample time to the auto industry to take the benefit of the scheme and roll electric and hybrid vehicles of different configurations.

We will go to the Cabinet with the new electric mobility scheme soon. Its launch is important as the increased usage of electric vehicle will help in cumulative fuel saving up to 9,500 million with 24 tonne cumulative reduction in CO2. It will also help to create 2.5-3 lakh additional jobs by 2020, said an official in the heavy industries ministry, asking not to be named. The ministry would be nodal body for the scheme and would periodically review the qualifying criteria for release of incentives.

While the new scheme has been in the works since 2009 when a Prime Minister's group recommended policy for faster adoption of electric vehicles as this would be the technology of the future.

Though NEMMP was launched in January 2013, it got delayed due to economic slowdown. With new government in place and signs of an early recovery veering on the horizon, it is felt that the plan should be implemented at the earliest.

The new scheme will be supported by the government under the National Mission for Electric Mobility for the five major thrust areas for intervention: demand creation (including retro-fitting of in-use vehicles), supply creation (domestic manufacturing), R&D, charging infrastructure and pilot projects.

A major chunk of government incentive will go towards demand creation while R&D activities would get another R1000 crore between 2014-2020 period. Incentive will vary depending on the use of technology, fuel savings and market adoption.