Car makers urge government to continue tax sops for EVs till penetration hits 15-20 percent

Leading car makers say the tax benefit and subsidy for electric vehicles should be extended till the time the industry hits a fixed penetration level as against a stipulated time frame or quantum of benefit.

By Ketan Thakkar and Radhika Dave calendar 30 Nov 2023 Views icon3634 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp
Tata electric car image

The Central Government offers a five percent Goods and Services Tax rate or GST on electric vehicles

Leading car makers like Tata Motors, Maruti Suzuki and Audi India say the tax benefit and subsidy for electric vehicles should be extended till the time the industry hits a penetration level of at least 15-20 percent as against a stipulated time frame or quantum of benefit.

Speaking at the Autocar Professional’s India EV Conclave in partnership with the Tamil Nadu Government, Shailesh Chandra, MD of Tata Motors said, “Any market that has crossed 15 percent penetration has seen great success, one can see it in Europe and China. The subsidies have been reduced only once it has seen a 17-18 percent level. Once India hits that level, then the subsidy should be retracted, because the government also cannot continue it forever. A 15-20 percent penetration level should be a consideration from the government before reducing subsidies.”

The Central Government offers a five percent Goods and Services Tax rate or GST on electric vehicles at present as against 28-55 percent tax on the internal combustion vehicles.

Apart from that for the passenger vehicle industry – also gets benefits from the Production Linked Incentive Schemes – these, in tandem with some state government benefits, help vehicle makers to price their zero-emission vehicle much closer to the internal combustion vehicles.

The Government of India has set a target of electrifying 30 percent of car sales by 2030. Tata Motors on its part has set an internal target of selling half of its vehicles with an electric powertrain. The mainstream market leader Maruti Suzuki foresees about 15-20 percent of the market to be EVs by 2030 and Audi India expects the penetration to be much higher than the mass market due to the ability of top end vehicle buyers to pay premium over mainstream vehicle buyers.

Balbir Dhillon, Head of Audi India says he expects the penetration in the luxury car to be much more than the mainstream vehicle, “When it comes to subsidy or tax benefits, they are needed in the initial years of adoption and the support has to be sustainable for a period of 8-10 years. What we need is policies which are stable, consistent and with a visibility of three to five years ahead of us. A stable regime is very critical apart from duties and tax benefits.”

Along with the tax benefits for the end vehicles, there has to be support for the charging infrastructure to ensure that the ecosystem evolves in tandem with the lower tax regime, feels Dhillon.

Aditya Jairaj, Deputy MD of Stellantis India called for a common interface where consumers can look at all charging options and look at which chargers are available and working and for easy ways of payments can be initiated.

“We have to be patient and focus on all the enablers in order to reach mass market adoption. So as an estimate, in 2030, 20-25 percent EV penetration, I would call good success,” he added.

 

Also read:

Mass market EV and ICE vehicles will come at same price in 12-18 months, says Shailesh Chandra

Transition to BEV not a choice, an imperative, Tata Motors on course for 50% penetration by 2030, says Shailesh Chandra

EV transition is a marathon, Govt support needed for a decade – Balbir Dhillon, Head, Audi India

Maruti Suzuki focused on fundamentals of EVs over hype, will make in India for the world, says ED, Rahul Bharti

Maruti likely to export Rs 1,000 crore worth of li-on cells next year

‘Electrification is a global opportunity for India:’ KK Paul of TI Clean Mobility

‘Data is a key driver of the EV transition’: Amitabh Saran

‘Industry is collectively making investments to create EV supply chain’: Suman Mishra

TN expects EV investment in the state to double to Rs 80,000 crore in two years

'We must not look at electrification merely as an ICE-to-EV transition': Arun Roy

'India must stop China comparison, focus on its own capabilities': Vivek Vikram Singh, Sona Comstar

SABIC committed to long term EV development, making significant investments in India

In manufacturing, important to look at scale in a modular fashion, says Tata AutoComp's Ravi Chidambar

TN will strive to inculcate ‘Climate Common Sense’, says Industries Minister Dr TRB Rajaa

Tamil Nadu's policies has been consistent irrespective of regimes 

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