Govt apathy takes the charge off electric vehicle makers

Written by Yogima Seth | New Delhi | Updated: Feb 9 2010, 05:48am hrs
The electric vehicle industry, which started indigenisation in a big way four years back, is virtually bleeding and some organised players are also on the verge of shutting shops as they continue to sell their e-bikes at lower rate, courtesy no support from the government.

While in India there is reduced VAT rates in some states to promote the use of electric vehicles, over 10 countries in Europe along with Japan and Singapore offer government subsidies ranging from 15-50% and lower insurance rates as well as free charging facilities to encourage the use of e-bikes as against conventional gasoline vehicles.

Consequently, despite a very low base, the Society of Manufacturers of Electric Vehicles (SMEV) expects that the electric two-wheeler manufacturers will fail to meet the sales target for 2009-10 and the sales will be flat even in 2010-11 if the government does not intervene with some incentives.

We are seeking 25% subsidy on all electric vehicles for three years as almost all manufacturers are heavily bleeding with losses of Rs 5,000 to Rs 7,000 on each two-wheeler that they sell, especially the ones that cost Rs 30,000 and above, as two-wheeler buyers tend to go for traditional gasoline bikes at prices beyond Rs 30,000, resulting in extremely low volumes in top-end segments, Sohinder Gill, director (corporate affairs), SMEV said.

According to Gill, the upcoming Budget is very crucial for the electric vehicle industry, of which two-wheelers account for nearly 99% of the total market with sales of nearly 1,00,000 units in 2009-10. While Chinese bikes continued to be dumped into India because of an inverted duty structure, organised players have managed to garner 50% market share but there is a probability of some of the small players closing down their factories if the government does not rationalise the inverted duty structure and withdraw the basic custom duty and CVD/ED from critical parts like battery, motor, controller, charger, etc, Gill added.

Electric vehicles continue to attract 4% VAT in states like Orissa, WB, MP, Chhattisgarh, Kerala, Karnataka, and Pondicherry, 12.5% on other states except Delhi, Uttrakhand, Lakshadweep, where there is no VAT on EVs, and an additional surcharge of 2.5% in Gujarat, UP and Rajasthan, which makes the vehicle non-competitive and therefore a need to enforce zero VAT regulation nationally, Naveen Munjal, managing director, Hero Electric said.

Centre must also convert some cities as model cities with installation of charging stations, declare highly polluted areas as electric vehicle zones, catalyse bulk purchase of EVs in government departments and introduce a clear policy frame work on EVs to be part of town planning infrastructure, SMEV added.