Nitin Gadkari suggests EV subsidies are no longer needed, citing growing demand, falling battery costs, and GST benefits.
It’s as recent as last week that Union minister Nitin Gadkari stated that EV subsidies are not needed for EV manufacturers in India. Addressing a summit on September 5, Gadkari said that there is increasing acceptance of electric vehicles and similar such vehicles like CNG. Battery costs were cited as having reduced over the years while taxes were cited to be friendly for operations of the EV industry without the need for government subsidies. According to Gadkari, adequate market competition with conventional fuel vehicles is expected within two years of parity.
Elimination of New Taxes on Traditional Fuels
Speaking at the occasion, Gadkari went against his word and stated that there were no plans to impose more taxes on the traditional fuel types like petrol and diesel. However, he stressed on the importance of having an adoption of the other types of fuel. Currently the Government of India has laid down an expectation that twenty percent of total vehicular sales should be electric by the year 2030 to mitigate emanations and reduce reliance on imported oil.
FAME Scheme and Slow Rate of Adoption of EVs
India launched the FAME India scheme for promoting the manufacture and use of hybrid and electric vehicles. Nevertheless, there is a small penetration of EVs in the country and only about five percent of two-wheelers and two percent of passenger cars sold in India since 2018 have been electric. But in his view, there is no more a question of having to offer incentives as this sector has evolved, and there is more demand and decreased costs in production.
Goods and Services Tax on EVs and Price Parity
India currently has the lowest GST of five percent for electric vehicles while hybrids and traditional fuel vehicles come with 28% GST. Nevertheless, there are still higher costs of EVs. Regardless, Gadkari is pretty sure that the price of EVs will be in line with conventional automobile prices in the next two years hence no further subsidization will be needed.
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