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

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.

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