The Society of Manufacturers of Electric Vehicles (SMEV), today urged the central government to address various hindrances in the upcoming budget, which will facilitate faster adoption of electric vehicles in the country.

The nodal body, which has been vocal about the high tax rates as one of the key impediments to faster adoption of electric vehicles in the country has urged the government for 5 percent GST rate on EVs and subsystems that will help achieve EV adoption in the country.

SMEV states that reduction in GST is critical to achieve targets set under the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles policy rolled out two years back with much fanfare.

“GST reduction is critical to achieve FAME targets and galvanize E-vehicle industry,” said Sohinder Gill, director, corporate Affairs, SMEV. He further points out that to support the government’s ambitious vision of selling only EVs in the country by 2030, and to help the industry grow at a faster pace, SMEV expects the government to take immediate remedies and proactive measures which have been identified by it and were also known to the government.

The industry body says that some areas which require immediate government’s intervention relates to streamlining and ironing out policy details, adequate fund allocation in Budget 2018-19.

SMEV’s expectations

Launch of next phase of FAME Scheme for a longer period of six years and its time-bound implementation: The industry body expect the government to timely announce the launch of the next phase of FAME scheme for a longer period. It says that due to high ownership cost of EVs in the present scenario, the approach to Demand Incentives (DI) and Viability Gap Funding (VGF) needs to be changed and the existing subsidy module needs to be enhanced for the next six years as compared to the previous short term periods i.e. 6 months - 1 year.

Reduction of GST to 5 percent on all EVs and EV subsystems.

Rebate on Income Tax for consumer adopting electric vehicles: many countries such as Norway, France, Canada, Denmark and Netherlands have already implemented this policy in their respective systems and have garnered a plethora of benefits out of it. For instance, Norway now has 36 percent of EVs on road due to such supportive policies. Similar policy can be introduced in India as well as a step to encourage faster EVs adoption wherein the government need not spend money by utilising public funds to make any transactions. It will further encourage customers to purchase more EVs in the upcoming future as well. 

Indigenisation of EV components: IGST for all imports should be 5 percent. In addition, import duties on motors, controllers and DC-DC converters should be zero in the first three years, and should be increased to 10 percent in the fourth year and 20 percent in the sixth year. This will encourage local manufacturing and give time to companies for setting up their local manufacturing.

SMEV says it is hopeful that the coming budget will incorporate its recommendations in the interest of new greener future.