Nowadays, electric vehicles are getting major attraction and therefore, the government has reportedly decided to offer a direct subsidy of around Rs 1.4 lakh for each electric car with an aim to boost sales of the electric vehicles, including cars and two-wheelers and three-wheelers.
The particular announcement was made during a meeting of the committee on EVs on 23rd August 2018, which was chaired by Expenditure Secretary AN Jha. Along with this decision, the ministry also decided to increase the allocation of subsidy on e-vehicles from Rs 4,000 crore to Rs 5,000 crore for a period of five years under the second phase of Faster Adoption and Manufacturing of Electric (and Hybrid) vehicles (FAME) scheme.
Under the phase 2 of the scheme, the government is looking to see about 8-fold increase in the sale of EVs. Pollution has been one of the most focused reasons for the increase in the use of EVs, and thus, the government initially wants to focus on 11 most polluted cities of India including New Delhi, Mumbai, and Bengaluru.
The ceiling on the amount of subsidy has been fixed at 20 percent of the cost of the vehicle. This would enable the buyers to get the subsidy as high as Rs 4 lakh for certain high-end electric cars. Also, they can enjoy such subsidies on such models which are not yet introduced to Indian roads. The scheme also extends benefits for two-wheelers and three-wheelers.
“The FAME incentives (are) to be allowed across all categories of vehicles for all cities (similar to 2Ws and 3Ws), in line with government’s intent of complete electric mobility over the period of time. Any restrictions on cities/geographies (would) defeat the purpose,” a note issued by DHI stated.
India seems to be aiming high at becoming an important market for EVs by increasing the EV penetration from the current one percent to at least 40 percent by the year 2030. Along with this, the finance ministry may also make petrol and diesel cars more expensive by imposing a marginally higher tax for the purpose of encouraging people to use more EVs.