Electric vehicle manufacturers no longer need subsidies from the government

BusinessUnion Minister Nitin Gadkari on Thursday said there is no need to provide subsidy to electric vehicle manufacturers as consumers are now choosing EV or CNG vehicles on their own. Addressing the BNEF summit, Gadkari said initially the cost of manufacturing electric vehicles was high but as the demand grew, the production cost came down, eliminating the need for further subsidy. “Consumers are now choosing electric and compressed natural gas (CNG) vehicles on their own and I don't think we need to provide much subsidy for electric vehicles,” the Road Transport and Highways Minister said. The minister pointed out that the GST on electric vehicles is lower than that on petrol and diesel vehicles. “In my view, the manufacturing of electric vehicles no longer needs to be subsidised by the government. The demand for subsidy is no longer justified,” he said. Currently, 28 per cent GST is levied on vehicles powered by internal combustion engines, including hybrids, and 5 per cent on electric vehicles. Ruling out additional taxes on petrol and diesel vehicles, Gadkari said the overall shift from fossil fuels to alternative fuels will be a gradual process given the size of India's economy and energy needs. The minister also said further reduction in the cost of lithium-ion batteries will bring down the cost of electric vehicles. “Within 2 years, the cost of diesel, petrol and electric vehicles will become the same… In the initial period, the cost of EVs was very high, so we needed to give subsidy to EV manufacturers,” he said. Asked if the government would extend the FAME scheme, the minister said, “FAME scheme subsidy is a good subject and it is not related to my ministry.
The government hopes to finalise the third phase of its flagship electric mobility adoption scheme FAME in a month or two, Union Heavy Industries Minister H D Kumaraswamy said on Wednesday.He has said that an inter-ministerial group is working on the inputs received for the scheme, and efforts are being made to resolve issues in the first two phases of the (Hybrid and) Electric Vehicles (FAME) scheme. FAME 3 will replace the temporary Electric Mobility Promotion Scheme (EMPS) 2024, which is scheduled to end in September. The second phase of FAME was launched in 2019 with an initial outlay of Rs 10,000 crore for three years. It was later extended till March 2024 with an additional budget outlay of Rs 1,500 crore. The initial target of the scheme was to provide assistance to 10 lakh electric two-wheelers, 5 lakh electric three-wheelers, 55,000 passenger cars and 7,000 electric buses. Kumaraswamy said, “On FAME 3, many suggestions are coming as we are working on how to overcome whatever shortcomings there are in FAME 1, FAME 2. Even the PMO has given some suggestions, our inter-ministerial group is working on it.” Asked about the timeline for FAME 3, the minister said, “I think it will get approval within 1 month, 2 months.” On whether the FAME 3 proposal will be sent to the Union Cabinet for approval in a month or two, the minister said: “There are still many suggestions coming, we have to adopt all those things, whatever is the best, positive way, we have to take those decisions.”