More power to the electric vehicle maker

To reduce dependence on fossil fuels and promote alternative vehicle technologies, the Government announced on Monday a variety of incentives for electric vehicles (EVs) and hybrids in Budget 2011-12.

It also announced the formation of a new inter-ministerial mission for EVs and hybrids, which would be a single-point resource for all the industry's needs on infrastructure, R&D and new incentives.

“World over, substantial investments are being made in the field of hybrid and electric mobility. To provide green and clean transportation for the masses, National Mission for Hybrid and Electric Vehicles will be launched in collaboration with all stakeholders,” said Finance Minister Mr Pranab Mukherjee in his Budget speech.

The new agency aims to support the development of a cost-effective EV technology for a mass platform and start operations by April-May. It will be administered by the Ministry of Heavy Industry, but include Ministries like Urban Development, New and Renewable Energy, Power, besides the industry as stakeholders.

“For funds, we will pool the allocations given to all the other Ministries, like the JNNURM and the Climate Change Fund of the Ministry of Environment. We will be sending the Cabinet note very shortly, but since the announcement has been made, we expect to start constituting the council by April,” Mr B.S. Meena, Secretary, Heavy Industries told Business Line.

The Government has also proposed extending the basic customs duty exemption and concessional rate of Central Excise duty of 4 per cent for batteries imported by manufacturers for the replacement market.

This was provided for some specified parts of electrical vehicles in the previous Budget. Concessional excise duty of 10 per cent has also been proposed for vehicles with fuel cell or hydrogen cell technology. Hybrid vehicles already enjoy a concessional excise duty rate of 10 per cent.

Dr Pawan Goenka, President, Automotive and Farm Equipment Sectors, Mahindra & Mahindra said the company is working on developing full hybrids on a commercial scale and the new policy would provide a significant incentive to promote the development, manufacture and sale of such vehicles in India. Mahindra-Reva is currently the only company to retail electric cars in India.

Though Mr R.C. Bhargava, Chairman, Maruti Suzuki said EVs are yet to be commercially viable, GM India's Mr Karl Slym said the announcements were on the right path and would accelerate the industry's plans on EVs and hybrids.

With many critical parts for such vehicles currently being imported, some specified parts have also been given a full exemption from basic customs duty and special CVD. However, a concessional rate of excise duty of 5 per cent has been prescribed to incentivise their domestic production.

Further, the excise duty on hybrid kits that convert traditional vehicles into more fuel-efficient machines, has been reduced to 5 per cent from 10 per cent.

Mr Kumar Kandaswami, Leader Manufacturing, Deloitte India said, “The mission for electric and hybrid vehicles may bring about acceleration in the mainstreaming of these technologies.”