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With Budget boost, electric cars may become cheaper

The promotion of the electric and hybrid vehicles is part of the National Electric Mobility Mission Plan (NEMMP) 2020.

Written by Shruti Srivastava | New Delhi |
Updated: February 12, 2015 3:52:26 am

Hybrid and electric vehicles may soon become cheaper with the government considering a proposal to give incentives to manufacturers of such vehicles in Budget 2015-16.

Pushing Narendra Modi’s ‘Make in India’ campaign, the Finance Ministry is likely to allocate Rs 800 crore in the Budget to promote manufacture and sale of electric and hybrid vehicles. The move is expected to bring down the prices and help in substantial reduction of carbon dioxide emissions by about 1.5 per cent by 2020, a senior government official told The Indian Express.

According to the proposal worked out by the department of heavy industry, the government will provide a subsidy of 35 per cent of the price differential between a petrol and an electric vehicle to promote the purchase of hybrid and electric vehicles. However, the subsidy amount will be capped at Rs 1.2 lakh in case of cars, the official said.


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For instance, the current ex-showroom price of the base model of Mahindra Reva TO1, an electric vehicle, is Rs 5,95,657 in Delhi while Maruti Suzuki’s Alto 800, a petrol vehicle, costs Rs 2,82,435. The difference in price is Rs 3,13,222, of which the government will pay 35 per cent to the manufacturers to reduce the price.

“The incentive proposal was cleared by the expenditure finance committee recently and is likely to be announced in the Budget. After the allocation is made, the scheme will be rolled out from April 1, 2015,” the official said.

“Currently, electric vehicle manufacturers take around five years to break even on each car. With this incentive, we are trying to bring it down to two years. We are also planning four centres of excellence for technology along with charging infrastructure, while initiating pilot projects of electric vehicles,” the official added.

The promotion of the electric and hybrid vehicles is part of the National Electric Mobility Mission Plan (NEMMP) 2020, which was launched by former prime minister Manmohan Singh in 2013. The plan seeks to mitigate the adverse impact of vehicles on the environment while boosting growth of domestic manufacturing capabilities.

The NEMMP says that government support to the tune of Rs 13,000-14,000 crore over the next five-six years would be required to make manufacturing of full range of cleaner electric vehicle technologies that include mild hybrid, full hybrid vehicles, plug-in hybrids, and pure electric vehicles.

On March 31, 2012, the Ministry of New and Renewable Energy had ended a scheme under which 20 per cent subsidy was offered to consumers on purchase of electric vehicles. Under the scheme, the ministry provided a cash subsidy of Rs 4,000-5,000 on electric two-wheelers and of Rs 1 lakh on electric cars.

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