The government’s new action plan to curb use of fossil fuels can replace close to half of the motor vehicles to run on electricity on Indian roads by 2030.
The Union Cabinet will soon consider the Faster Adoption and Manufacturing of Hybrid & Electric vehicles in India (FAME) scheme to provide both manufactures and consumers of electric vehicles (EVs) to get assorted incentives: tax and non-tax, according to The Financial Express.
The discussion includes reducing the Goods and Services Tax (GST) levied on electric cars to zero from 12% now. At present, the GST (inclusive of cesses) on petrol/diesel vehicles ranges around 28-43%.
If states agree to the plan, EVs will be exempt form toll-tax and road-tax making it cheaper.
EV’s cost around 2.5 times of petrol/diesel vehicles and the scheme could enhance cash incentives to buyers, sources aware of the plan told Financial Express.
The move will also ease domestic EV manufacturers as well as encourage global players such as Tesla, Toyota, Nissan and Renault to set up manufacturing units in India.
Under the FAME scheme, a two-wheeler buyers get up to Rs 22,000 reduction in purchase price while the price discount is up to Rs 25,000 for three-wheelers and Rs 1.87 lakh for 4-wheelers.
EVs manufactured in India can travel about 100 km in a single charge compared to 300-350 km by EVs manufactured by firms like Tesla. To solve this problem, the government will likely incentivise setting up of lithium ion battery plants in India.
Earlier, Maruti Suzuki India had approached the government for incentives to establish an integrated manufacturing facility for the battery pack in India.
Mercedes Benz Managing Director for India Roland Folger has also asked the government to offer incentives on electric-car imports until local output becomes viable – if New Delhi is keen on ending fossil-fuel transport by 2030, reported The Economic Times.
The German automaker, which is heavily investing in technology for electric mobility, said that if adequate support is extended these vehicles may make their way to India by 2020.
Earlier in June, Tesla CEO Elon Musk had said on Twitter that he is in talks with the government of India regarding temporary relief on import restrictions until a local factory is built in the country.
With continued decline in battery costs, EVs are becoming cost effective. A set of fiscal incentives can create a self-sustaining EV market that will help India achieve its 2020 target of 6–7 million EVs and nearly half of the 66 crore (from 21 crore now) vehicles by 2030.
According to a Niti Aayog-Rocky Mountain Institute (RMI) report, India can save 64% of anticipated passenger road-based mobility-related energy demand and 37% of carbon emissions in 2030 by pursuing a shared, electric, and connected mobility future.
This would result in a reduction of 156 Mtoe in diesel and petrol consumption for that year.
“At $52/bbl of crude, this would imply a net savings of roughly Rs 3.9 lakh crore (approximately $60 billion) in 2030. This would help India in achieving its commitment under Paris Climate Agreement to reduce the emissions intensity of its gross domestic product by 33-35% by 2030 from 2005 level. Simultaneously, it would also help Indian renewable energy manufacturers who could have 175 gigawatt capacity including 100 GW from solar by 2022. The EV batteries could be used to store solar energy,” said the report.