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Govt fuels electric cars with Rs 1 lakh incentive

Business Standard:  November 23, 2010

New Delhi: The Society of Manufacturers of Electric Vehicles (SMEV) expects sales of electric two-wheelers to double in the coming months, on the back of a Rs 95 crore incentive scheme announced by the Ministry of New and Renewable Energy (MNRE) today.

Under the scheme, the government will provide financial incentives for each electric vehicle sold in India during the remaining part of the 11th Plan. The scheme, which will come into effect immediately, envisages incentives of up to 20 per cent on ex-factory prices of the vehicles, subject to a limit.

The cap on the incentive will be Rs 4,000 for low-speed electric two-wheelers, Rs 5,000 for high speed electric two- wheelers and Rs 1,00,000 for an electric car.

Sohinder Gill, director, SMEV said, “This could have an immediate impact on sales of electric two-wheelers. In terms of monthly sales, we expect an immediate doubling of sales.” Gill added, a meeting would soon be convened among members to pass on benefits to consumers.

“The incentive is for manufacturers to invest in research activities and enhance capacities. But we are looking at ways to partially pass on the benefits to customers”, added Gill. Electric two-wheelers are priced between Rs 25,000 and Rs 40,000 depending on the speed range.

Manufacturers would, however, have to register with SMEV for availing of the scheme. Registration would be provided on meeting eligibility norms, which include having 30 per cent indigenous content in the vehicles sold, a sizeable operation in retail and after sales outlets and a multi-point check system for accounting the retail sale.

The notification says, the government will take up “dissemination of two-wheelers, three -wheelers and four-wheelers Battery Operated Vehicles (BOV) and R&D and technology demonstration and other activities in the area of Alternative Fuels for Surface Transportation at a total cost of Rs 95 crore during the remaining period of the 11th Plan”.

In 2010-11, the government will subsidise 20,000 units of low speed electric two-wheelers and another 10,000 units of high speed two-wheelers. In 2011-12, the numbers would increase to 80,000 units and 20,000 units low-speed and high-speed two-wheelers respectively. Additionally, the government has also decided to incentivise 100 units of three-wheelers and 140 units of passenger cars in the rest of this year, which would be upped to 166 units and 700 units in the next financial year. The Indian electric two-wheeler market, at present, stands at about 85,000 units annually. Some of the leading electric two-wheeler manufacturers include Hero Electric, Avon Cycles, BSA Motors and Lohia Auto.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

x IBEF : India Brand Equity Foundation