Automakers cool to government vision on alternative fuels

By: | Published: September 7, 2018 5:02 AM

Transport and highways minister Nitin Gadkari said that the government has decided to exempt EVs and automobiles that run on alternative fuel from permit requirements in a bid to boost such vehicles in the country

automobile sector, automobile industryGadkari said that the government has decided to exempt EVs and automobiles that run on alternative fuel from permit requirements in a bid to boost such vehicles in the country.

Last year, the automakers at SIAM (Society of Indian Automobile Manufacturers) annual convention had complained about policy flip-flops in the sector which impacted their business planning but this time, there seemed to be no such complaint. In fact, most manufacturers seemed satisfied as the government spelled out its vision regarding alternate fuels (CNG & EV) and how infrastructural and non-fiscal incentives would enable 15% of the total vehicles on road to run on such fuel in the next five years.

With regard to compressed natural gas (CNG), petroleum minister Dharmendra Pradhan said that in a year or two the number of CNG stations would go up to 10,000 from the current 1,424. The transport and highways minister Nitin Gadkari said that the government would frame a series of non-fiscal incentives which would help more electric vehicles to come on road.

That the government-industry sentiments were in sync was clear with Mahindra and Mahindra (M&M) managing director Pawan Goenka saying that he expects the electric vehicle segment to stabilise in the country over the next five years with vehicle prices coming down due to reduction in battery cost.
Though Maruti Suzuki officials did not say anything, industry executives said that the company would be a major beneficiary with the focus on expansion of CNG outlets as the company makes the largest number (7 models) of factory-fitted CNG vehicles. It has, till date, sold more than 4 lakh CNG vehicles.
According to industry estimates, currently there are 3 million CNG vehicles on road in the country which would go up to 17 million once total number number of CNG stations touch 10,000.

Gadkari said that the government has decided to exempt EVs and automobiles that run on alternative fuel from permit requirements in a bid to boost such vehicles in the country.
“With GST at 12% on EVs, I don’t think there is any further need for subsidy. … we need to think innovatively to bring in that environment. My ministry has prepared a detailed report to raise production of EVs through non-fiscal initiatives in the next five years,” Gadkari said, clarifying that the subsidy was not mandatory.

The government is promoting eco-friendly vehicles through Faster Adoption and Manufacturing of Hybrid & Electric Vehicles (FAME) India scheme, which was launched in 2015. The second phase of FAME India scheme will be launched by Prime Minister Narendra Modi on September 7.
M&M’s Goenka said he expects electric vehicles to account for 30% of the overall auto market in the country by 2030.

“If we are not reaching 1,000 units a month by fourth quarter, I’ll be worried. That should be the first milestone, 25,000 vehicles a year in 2020, then by 2023-24 we should be reaching around 20,000 a month. If we can reach these milestones we can think of 30% by 2030,” Goenka said.
He said for EV segment to expand in the country, there is a need to create a virtuous cycle with one thing leading to another.

“It can (sales) happen only when infrastructure is there, vehicles are affordable and range is good and lots of options available for the consumer,” Goenka said.

He said that besides charging infrastructure, the segment would also expand if overall maintenance cost of EVs comes down.

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