Union minister Nitin Gadkari Says No Need for Further EV Subsidies

Union minister Nitin Gadkari announced on thursday that there is no longer a need for government subsidies for electric vehicle (EV) manufacturers, as consumer demand for EVs and compressed natural gas (CNG) vehicles has risen significantly. Speaking at the BNEF Summit, Gadkari highlighted that while manufacturing costs for electric vehicles were initially high, increased demand has led to reduced production costs, making additional subsidies unnecessary.

“Consumers are now choosing electric and cng vehicles independently, and I don’t think we need to provide much subsidy for electric vehicles anymore,” said Gadkari, who serves as the minister of Road Transport and Highways. He also noted that the Goods and services Tax (GST) on electric vehicles is lower compared to petrol and diesel vehicles.

Currently, vehicles with internal combustion engines, including hybrids, are taxed at 28% GST, whereas electric vehicles enjoy a reduced rate of 5%. Gadkari emphasized that the manufacturing of electric vehicles no longer requires government subsidies, asserting that “the ask for subsidies isn’t justified anymore.”

Gadkari also mentioned that the cost of lithium-ion batteries is expected to decrease, which will further reduce the overall cost of electric vehicles. He predicted that within two years, the costs of diesel, petrol, and electric vehicles will be comparable. Initially, EVs were priced high, necessitating subsidies for manufacturers, but this is no longer the case.

Regarding the extension of the FAME scheme, Gadkari noted that the scheme’s future is not under his ministry’s jurisdiction. On Wednesday, Union Heavy industries minister H.D. Kumaraswamy indicated that the government is expected to finalize the third phase of its flagship electric mobility scheme, FAME, within the next couple of months. This phase will replace the temporary Electric Mobility Promotion Scheme (EMPS) 2024, set to expire in September.

The second phase of FAME, launched in 2019 with a budget of Rs 10,000 crore for three years, was later extended until march 2024 with an additional allocation of Rs 1,500 crore. The scheme’s initial targets included supporting 1 million electric two-wheelers, 500,000 electric three-wheelers, 55,000 passenger cars, and 7,000 electric buses.

Kumaraswamy mentioned that the inter-ministerial group is working on incorporating suggestions to address the shortcomings of the previous FAME phases and that feedback from the Prime Minister’s office has been considered in the development of FAME 3.
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Subashini

05/09/2024 07:47 PM