Tax petrol, diesel vehicles to pay electric vehicles’ subsidy: SMEV to Govt

While the electric vehicle industry is still at a nascent stage, it will require some nurturing from the government in the form of incentives to stay competitive with inter combustion dependent counterparts. The SMEV proposes a green cess for the manufacture

By: | Updated: September 23, 2018 6:59 PM

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The governments sustained push toward EVs may have been vocal but do not seem to have the follow through that the industry needed to fully blossom. Electric Vehicle sales in the ongoing fiscal are expected to plateau at around 74,000 units, while the FAME II scheme that was expected to bring respite to the industry is nowhere to be seen. The Society of Manufacturers of Electric Vehicles’ (SMEV) data shows that while the market has grown from last year, with 56,000 units sold so far this year against the 25,000 in 2017, it had shied from its true potential. Sohinder Gill Director of the SMEV expressed that had FAME 2 arrived in time, in April this figure would have been in excess of a lakh.

The confusion around FAME 2 was doubled when earlier this month, Heavy Industries Minister Anant Geete indicated that the governments’ FAME 2 scheme would be at the end of September. Speculations led to the expectation of an announcement around the MOVE mobility summit held in New Delhi on September 7-8 from PM Modi, which never came. A delay was expected by the industry though, after the government had incrementally extended the Fame1 policy till the end of September or till the Fame 2 scheme was announced. Experts in the industry believe that the delays on subsidies are being driven by the monetary pressure they will put on the Government. Some in the EV industry think a monetary cess on petrol and diesel vehicles would be a good way to liberate funds for the required concessions.

Express Drives spoke to Director SMEV Sohinder Gill who has offered a solution to the Government such that subsidies don’t way hard on the Countries coffers. “One of the reasons the government is dragging feet on FAME2 is the burden of subsidies on the exchequer. SMEV has suggested a way out to DHI and NITI Aayog on how to have more than 1 million electric two-wheelers on the roads in the next 3 years without the subsidy burden. A mere Rs500 green Cess on the 2 crore Petrol 2 wheelers being sold in the country can yield Rs.3000 cr and that will be enough to subsidise 1 million electric 2W as well as for a major "CLEAN AIR Campaign" that can be started by the government to promote EVs SMEV is still awaiting response on this idea. If for some reason or pressure from the manufacturers, it becomes difficult to levy the green cess, the government can think of refunding an equivalent amount per Electric 2 Wheelers for those petrol bike manufacturers who undertake to make Electric 2 Wheelers along with the Petrol bikes. Let's wait and see whether the policymakers can gather the courage to take this step,” says Gill.

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In the first phase of the FAME scheme, which was initially proposed for two years till March 31, 2017, subsidies largely focused on revamping the public transport system. Which led to the acquisition of a number of electric buses by various state transport authorities. The private vehicle industry, meanwhile, lay in wait of the FAME 2 scheme which was expected to bring subsidy to all categories of electric vehicles, including two-wheelers, three-wheelers and four-wheelers including taxis and electric buses used in public transportation, to promote green vehicles and check pollution.

Electric Cars tottered at less than 700 units sold this year in a market where 35,000 EVs were sold, most of which were two-wheelers. Sohinder Gill, who is also the CEO of Hero Electric further said: "In the last two years, many manufacturers have started using lithium-ion batteries which have increased the quality of electric two-wheelers as compared to those which were powered by lead-acid batteries,". With consumer confidence in electric on the rise, competitive pricing vis-a-vis petrol competition is paramount to fueling demand.

 

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