No deadline: Centre allays auto sector's electric vehicle concerns

The government has moved to appease electric vehicle (EV) concerns of the automobile sector, currently in the throes of a slowdown.

Road Transport Minister Nitin Gadkari on Wednesday said the government has set no deadline to ban the production of petrol, diesel vehicles or for automobile manufacturers to switch to EVs. “The shift towards EVs will happen as a natural progression,” he reiterated.

On the same day, Commerce and Industry Minister Piyush Goyal assured automobile companies that their concerns would be heard on the proposed EV policy. The NITI Aayog is a think tank, not a policy-making body, he said at the 12th Motilal Oswal Annual Global Investor Conference in Mumbai. He was referring to a proposal by the Aayog to ban all three-wheelers with internal combustion engine by 2023, with a ban on all two-wheelers below 150cc following suit by 2025. 

According to its analysis, this can reduce energy demand by 2030 to the extent that potentially more than 35 per cent of the carbon emissions from the sector are wiped out. 

Automakers have expressed apprehensions over the government’s vigorous push to convert 15 per cent of all vehicle sales in the next five years into electric-powered ones. 

At the same time, domestic passenger vehicle sales — a key indicator of the economy — fell for the ninth straight month in July, according to the data from the Society of Indian Automobile Manufacturers (Siam). 

The Aayog proposal is backed by its Chief Executive Officer Amitabh Kant, say sources. Kant had called EVs the sunrise sector last month and pushed for investment sops in vehicle and charger manufacturing.

Over the past year, the government has allowed a number of direct, indirect tax concessions to boost the production and sales of EVs in the country. 

In October 2018, the transport ministry granted exemption to battery-operated commercial vehicles that has now led to more than 400,000 such vehicles being registered with the ministry as of August 2019.

In the last annual Budget, the government had announced income-tax rebates of up to Rs 1.5 lakh to customers on interest paid on loans to buy EVs, with total exemption benefit of Rs 2.5 lakh over the entire loan period, in the last Budget.

Also, in July, the goods and services tax (GST) Council, decided to reduce tax rates on EVs and chargers from August 1. The tax rate has been slashed from 12 per cent to 5 per cent on vehicles and from 18 per cent to 5 per cent on EV chargers. At the 36th meeting of the Council, it also approved GST exemption for hiring of buses by local authorities.

According to Siam, commercial vehicle sales fell 25.7 per cent to 56,866 units. Sales of Maruti Suzuki, India’s largest carmaker, plunged 36 per cent in July — the highest fall in two decades. 

A sustained slowdown has sparked layoff fears after Maruti Suzuki confirmed it has cut 3,000 jobs, mostly of temporary workers.

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