As per documents of Union Budget 2019, the subsidy on electric vehicles for the next financial year has been slashed by 25% to 195 cores which is Rs.260 crores for the current financial year 2018-19.
This sequential drop by the government is
the first since the launch of the FAME (Faster Adoption and Manufacturing of
Hybrid and Electric Vehicles) scheme, four years back.
Rs. 260 crores which was the subsidy set
aside for the financial year 2018-19 was however revised down to Rs. 145
Previous years have seen a sequential
increase in subsidy where in the first year of the launch of the scheme,
2015-16, the actual subsidy was Rs.74.99 crores and Rs. 122.90 crores in second
year, 2016-17. In 2017-18 while Rs. 175 crores was budgeted, the subsidy
actually given was Rs. 165 crores.
It is only this year that the budget has
been revised down by 44% from Rs. 260 crores announced earlier in 2017-18 to
Rs. 145 crores.
Ranging from two wheeled vehicles to multi-seater
buses which include scooters, small cars, sedans, three wheelers, vans, multi
utility vehicles, luxury buses, all electric and hybrid vehicles are provided government
subsidy which ranges from Rs. 7500 to Rs. 61 lakhs. According to government website on FAME, so
far Rs. 316.46 crores have been given as subsidy by the government.
According to Finance Minister Piyush Goyal
who laid out a ten point agenda for vision 2030 on February 1st,
Electric Vehicles (EVs) have an important role in the vision and EVs will help India
lead the world energy revolution.
The high manufacturing costs of the
electric and hybrid vehicles makes them costlier compared to their petrol and
diesel counterparts. For example, the Tata Motors Tigor Petrol is available for
an ex-showroom Mumbai price of Rs. 5.4 lakhs while its electric version sold to
government backed company was priced at little under Rs. 12 lakhs. To increase
the affordability of such vehicles, subsidies are therefore essential.
It is believed that the Government is
working on laying additional cess on petrol, diesel vehicles and to use the
funds for providing subsidies and increasing demand for electric vehicles. Though
further details are not available yet, it is believed that this cess would be applicable
to two-wheelers also.
To promote assembling of electric vehicles
in India, the government has also lowered the customs duty on import of parts
and components for electric vehicles from 15-30% to 10-15%. A separate category
for parts and components of electric vehicles has been carved out by the CBIC
(Central Board of Indirect Taxes and Customs) for which the customs duty will
The customs duty exemption to battery packs for electric vehicles have been removed by CBIC while on the battery packs for mobile phones the duty has been doubled. From now on, battery packs import for electric vehicles will attract 5% tax while duty on battery packs for mobile phones will be 20%.