What India should do to put more electric cars on the road

The Centre's intent to achieve significant electric mobility in five years has finally been given shape. But its implementation is a mammoth task. CNBC-TV18’s Farah Bookwala-Vhora outlines challenges that must be addressed for the government to realize its vision of putting 7 million electric and hybrid vehicles on Indian roads by 2020.

The govt introduced the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) in this year's Budget to fast track the promotion of green vehicles. But several challenges stand in the way of its successful implementation.

One, the lack of existing infrastructure such as charging stations in India is a big hindrance to the adoption of EVs. Two: ensuring timely reimbursements of demand incentives to manufacturers.

Over the next two fiscals, the government will offer Rs 495 crore in demand incentives in the form of reduced purchase price to consumers. The government promises to reimburse the subsidy to OEMs through an e-enabled mechanism within 60 days from the date of claims.

However, the government has failed to make these payments on time in the past, thereby drying up cash flows of manufacturers.

On the other hand, M&M, the maker of India's only pure electric car E2O, says while the incentives are a good start, they may be inadequate to spur demand.

“These amounts are not sufficient in an era where technology is getting evolved, “ says Pravin Shah, CEO-Automotive, M&M. “At this time, technologies are not locally available. The cost of adoption on developing those technologies is high.”

Thirdly, the government wants to implement Its EV policy in different states through pilot projects. But getting private investors on board will be a challenge.

Adds Sohinder Gill, President, EV Makers' Body: “When private investors invest in hybrid EVs, he still needs to convinced about the topline and bottomline aspects of investing.Because the sticker shock is still there after subsidy too.”

Add to that the problem of differential taxes in each state Even after the Finance Ministry issued a notification that VAT on EVs must not exceed 5 percent, states such as UP & Punjab have a VAT ranging from 12-14 percent, along with road tax of 5-6 percent, which defeats the purpose of subsidies

Source: moneycontrol.com