India Signs USD 1.4 Billion Electric Vehicle Incentive Scheme

Recently, the Indian government approved a plan to spend $1.4 billion to promote the sale of electric and hybrid vehicles as a part of its efforts to control pollution and decrease the dependency on fossil fuels. Reports suggest that the government could approve a new scheme under its Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) project as early as this week. A government statement said, under this scheme, subsidies would be offered based on the battery capacity of the vehicle. It would cover vehicle categories like buses, cars, three-wheelers and motorbikes. These incentives are applicable to vehicles costing less than 1.5 million Indian rupees ($21,177).

The government said that India will contribute 100 billion rupees ($1.4 billion) over three years on incentives.

The Indian government also states that these incentives will be extended to only those vehicles which are fitted with advanced batteries, using lithium ion or other new technologies. India is one of the most rapidly growing car markets in the world, but still has negligible sales of electric vehicles (EVs). The target of the Indian government is to make the country an all-electric nation by 2030. This scheme was initiated by the government back in 2017. But the analysts said the high cost of batteries and shortage of charging points are major barriers. Moreover, the car manufacturers also said the objective was too ambitious. The transport ministry has set a target of making up 15 per cent of vehicle sales in the next five years.

The Indian government has approved a plan to spend $1.4 billion to promote the sales of electric and hybrid vehicles as a part of efforts to control pollution and decrease the dependency on fossil fuels.

The government said that India will contribute 100 billion rupees ($1.4 billion) over three years on incentives. A source had earlier told Reuters that subsidies would amount to Rs 10,000 for each kilowatt-hour (kWh) of battery capacity in a vehicle, amounting to about 50 per cent of the battery cost. The normal value of an electric vehicle in India is now around 1 million rupees. The electric cars typically have a battery up to 20 kWh, so the discount under the new plan would be Rs 200,000. The Indian auto companies like Mahindra & Mahindra and Tata Motors both build electric cars in India. Moreover, Maruti Suzuki and Toyota Motor Co manufacture hybrid cars. Japan's Suzuki Motor Corp, previous year said it would start experimenting 50 electric vehicle models. It plans to launch EVs in India by 2020, in collaboration with Toyota motors.