1. Subsidy norm revision may spark electric vehicle sales

Subsidy norm revision may spark electric vehicle sales

The current scheme covers less than half the country and is applicable only to mega-cities, state capitals and cities with a population of over 1 million

By: | New Delhi | Published: July 18, 2015 12:04 AM

With the government considering the electric vehicle industry’s demand for a subsidy on electric two-wheelers, the sale of such vehicles is likely to get a boost in the coming months.

The FY16 Budget had allocated Rs 75 crore for subsidising the sale of electric vehicles. However, the current scheme covers less than half the country as it is applicable only to mega-cities, state capitals and cities with a population over 1 million. The north-eastern states are fully covered under the scheme and the smart cities, as and when they come up, will also be covered.

The industry had raised the issue with the government as the sale had remained stagnant in areas not covered under the subsidy scheme, whereas those areas covered under the scheme saw a robust growth.

The government is considering the demand of the industry. “The ministry of heavy industries is considering the proposal and we are in favour of taking measures that can boost sales of electric vehicles,” said Ambuj Sharma, additional secretary, ministry of heavy industries, adding the ministry will take up the issue with the finance ministry.

According to the subsidy scheme, buyers of electric and hybrid vehicles, depending on the speed and efficiency of the vehicle, get an upfront discount of one-third of the difference between the price of that particular vehicle and a comparable petrol model. Currently, this turns out to around Rs 7,000 for a high speed electric scooter.

The introduction of the subsidy had boosted the sale of electric and hybrid vehicles in the first quarter of the current fiscal. The sales of electric vehicles saw a 25% y-o-y growth in the April-June quarter. Against 4,000 units sold in the June quarter last year, the sale rose to 5,000 units this year.

Upbeat with the sales figure, Sohinder Gill, chief executive officer, Hero Electric, said in the current financial year, the industry is expecting to double the sales. However, he said, this would only mean the industry “will move from the ICU to the general ward” as the annual sales for 2014-15 came down to 16,000 units against the high of 1,00,000 units in 2011-12.

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