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India may put levy on petrol and diesel cars purchase to push e-vehicles

Auto News - Published on Fri, 21 Dec 2018

Image Source: Times of India
Economic Times reported that using the “polluter pays” principle, the government has drafted a plan to impose a fee of INR 12,000 on purchase of new petrol and diesel cars to raise money for incentivising electric vehicles and battery manufacturing, under a new policy that is nearing finalisation. A note prepared by NITI Aayog after a meeting of top secretaries has proposed incentives of up to INR 25,000-50,000 in the first year for those buying electric two-wheelers, three-wheelers and cars, top government officials told TOI. To ensure that the gains aren’t pocketed by automakers, officials have proposed a direct benefit transfer to EV buyers while offering km-based incentives for state agencies operating e-buses. The revamped policy, which will require ministerial clearance, has been drafted after Prime Minister Narendra Modi junked an earlier draft and asked bureaucrats to ensure that batteries were incentivised to lower costs instead of offering sops to automakers.

Sources said the incentives will come along with improved fuel efficiency and emission norms and are needed for a rapid ramp-up of vehicles using clean technology. The “feebate” is expected to help the government garner close to INR 7,500 crore in the first year and supplement its budgetary outlay of a mere INR 732 crore, which it reckons is insufficient to fund the scale of expansion of EVs that is planned.

As the surcharge on “polluting cars” rises to INR 70,000 in the fourth year, the government hopes to mop up over INR 43,000 crore through the new levy. The surcharge burden will not be limited to fossil fuel cars. Petrol/diesel two-wheelers, three wheelers and commercial vehicles too will have attract a surcharge of INR 500-25,000 in the first year, which will go up to INR 4,500 to INR 90,000 in the fourth year.

The money will flow into a dedicated fund to be managed by the heavy industry department. The incentives for EVs will gradually come down from INR 50,000 in the first year to INR 15,000 by the fourth year of the policy. The levy comes with several incentives that are being proposed, ranging from lower customs duty and goods and services tax on raw material, components and battery packs, to waiver of registration fee and road tax for all EVs.

A part of the surcharge is also planned to be used to encourage domestic battery production. Sources said an incentive of INR 6,000 per kilowatt hour (KwH) will be offered. Further, the plan includes assistance for setting up charging infrastructure that may cover the entire cost. The government will spend about INR 200 crore for developing indigenous technology in areas such as power electronics and battery development, said a source aware of the proposals.

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Posted By : Joykumar Irom on Fri, 21 Dec 2018
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