Targeting roll out of subsidies for electric vehicles by 2014: Ministry of heavy industries

The ministry of heavy industries is targeting to roll out subsidies for electric vehicles - under the National Electric Mobility Mission Plan by April of 2014, reported PTI.

The policy unveiled by the Prime Minister Manmohan Singh earlier this year was stuck due to the slowdown in the economy. However, the senior government official said, the heavy industry ministry is planning to get all the cabinet approvals before the 1st of April so that the incentives start flowing to electric vehicle makers from April 1.

Speaking at the SIAM's 4th Diesel conference in Mumbai on Thursday Ambuj Sharma, additional secretary, ministry of heavy industries said the main impediment in rolling out the electric vehicle policy has been the slowing economy. ""The government is hard pressed for cash. The level of incentives which we are thinking is to the tune of Rs 12,000 crore over the next seven years, till 2020. On an average about Rs 2,000 crore will be provided as incentive, which is a big sum. We are trying to tie-up with the finance ministry, as to how best we can tie-up on incentives. The first two years, it will be low, we have to manage with the budgetary provision, but in the years to come, once the Indian economy will grow faster and the incentive will be higher, government will be much more liberal in offering incentive," added Sharma.

Post the Booz Allen study commissioned by the government to study the future potential for electric vehicles, two years back, the ministry had over 100 interactions with the automotive industry to devise a suitable incentive policy to create a thriving electric vehicle market in India. Till 2020, the government foresees a penetration of 1.5 million four wheelers, 4.5 million two wheelers, which will have a share of about 17 per cent of the total sales.

Sharma says if the electric vehicle market takes off, Rs 40,000 crore worth of fuel will be saved. The government is looking at the total cost of ownership model to offer the incentive to the vehicle maker. For instance, if the cost of internal combustion engine car is Rs 5 lakh and that of electric vehicle is Rs 6.5 lakh, the government intends to offer 35 per cent of the differential cost. In case of two wheelers it could be higher.

On the possible interest and investment from the industry, Sharma said Mahindra Reva has already set up a capacity of 40,000 units per year and similarly even Tata Motors and Maruti Suzuki are working on both hybrid and pure electric models for India. So they are likely to bring in electric vehicles in the next two to three years.

"Mahindra is already working on a four seater and a seven seater electric vehicle. Kinetic is working on a three wheeler. TVS and Bajaj Auto are working on hybrid motorcycles, which are at a homologation stage. 5-6 leading domestic manufacturers are already in the fray and we hope that foreign OEMs will also bring in their smaller cars at least," added Sharma.

Dion Global Solutions Ltd.

Story first published: Friday, November 29, 2013, 8:50 [IST]
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