SMEV recommends FM impose a "Green Tax" on ICE vehicles

Indian electric two-wheeler OEM start-ups hit badly by a potential demand slowdown by the FAME 2 subsidy cut have, on behalf of their apex body, SMEV (Society of Manufacturers of Electric Vehicles), urged the government to levy an additional Green Tax on ICE vehicles to encourage EV adoption and support the reduction of pollution-causing crude oil imports.

Sohinder Gill, Director General - of SMEV, reiterating the association’s recommendation on the occasion of World Envrionment Day, said, “Additional Green Taxing of ICE vehicles will not only bring EV and ICE at the same level but also encourage bigger OEMs to enter the EV market with confidence and a long-term outlook, which will benefit the country.”

SMEV has said that an increase in taxes to the tune of 100 basis points on traditional polluting ICE 2-wheelers will be required to fund subsidies for electric 2-wheeler vehicles. 

Pointing out that an average ICE two-wheeler emits nearly 300 grams of CO2 per kilometer, the SMEV said that with an average kilometer run of 30 km per day [lifetime mileage of 70,000 km], the CO2 burden from ICE scooters was 9 Kgs of CO2 per vehicle per day.  With sales in FY’23 of 1,58,62,087 units, the emission is almost 142 million kg of CO2 released in the atmosphere per day – and a huge 333 billion kg of CO2 - for the lifetime of the FY23 ICE scooters - which has potential long-term health - and financial implications for the country, he stated.

The Green Tax would also rationalise the expected drop in sales of EVs on account of the reduction in subsidies starting this month, Gill said.