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Nitin Gadkari says no deadline for automakers for switching to EVs

There is no specific deadline for automakers to switch to electric vehicles, since the shift to electric mobility will “happen in a natural progression”, road transport minister Nitin Gadkari said on August 22, reports Mint. The minister further added that the government will continue promoting cleaner fuels, according to the report. Meanwhile, the report also said that no deadline would be put on banning internal combustion engine vehicles without prior consultations with the industry.

Two-wheeler manufacturers have hit out aginst Niti Aayog’s proposals

Gadkari’s statements come at a time when mainstream two-wheeler manufacturers like Hero, Bajaj and TVS have hit out at Niti Aayog’s proposal of electrifying all scooters and motorbikes with an engine capacity of more than 150cc by 2025. TVS had argued that the transition from conventional to electric two-wheelers was “not like Aadhaar, not software and print cards” since it required migration to a completely new supply chain. Meanwhile, Hero MotoCorp said that Niti Aayog’s approach to electrification of two wheelers was “deeply concerning” and could potentially “jeopardise the industry”. Bajaj Auto said that such a transition was “completely uncalled for”. Niti Aayog has also proposed that only electric vehicles (EV) be sold in India after 2030

The incentives for EVs under FAME II and the Union Budget 2019-20

While much has been said about EV adoption in India, as of now, the only government scheme that directly impacts EVs is FAME (Faster Adoption of Manufacturing of (Hybrid &) Electric Vehicles), which is currently in its second phase. Interestingly FAME-II, when it was last updated in March 2019, did not provide incentives to private car buyers, unlike FAME-I, which gave buyers a direct subsidy of Rs 1.38 lakh. While FAME-II provides for an even higher subsidy of Rs 1.5 lakh, it is limited only to those buyers who want to put their electric car to commercial use. This has led to confusion for auto makers like Hyundai, which feel that there was not enough clarity in the government’s vision for electric vehicles. However, finance minister Nirmala Sitharaman announced several incentives for electric vehicles in the Union Budget 2019-20:

  • Individuals taking a loan to purchase an EV shall get additional tax exemption of upto ₹1.5 lakh on interest to be paid w.e.f April 1, 2020; loan has to be sanctioned between April 2019 and March 2023, and the individual must not already own an EV
  • Certain parts of EVs to be exempted from customs duty, including e-drive assembly, on board charger, e-compressor, and charging gun

Why the discord?

What remains to be seen if these incentives would be enough to propel India’s EV story ahead. Having said that, there seems to be discord within the government itself on how they wish to incentivise and promote EVs: the Niti Aayog toes a certain line, which is later refuted by the transport minister. This constant pull and push doesn’t seem very promising for the EV industry, and the auto-industry in general which is reeling under one of its worst slumps in decades.

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