The reduction of GST on e-vehicles, from the existing 12 per cent to five per cent, may have an impact on manufacturing of the electric bikes (e-bikes), but more than a cut in taxes is needed to boost its sales.
Presenting the Union Budget 2019-20, Finance Minister Nirmala Sitharaman proposed additional income tax deduction of Rs 1.5 lakh on the interest paid on loans taken to purchase electric vehicles as part of efforts to accelerate adoption of eco-friendly mobility solutions. To make such vehicles affordable, she also proposed to lower the GST from 12 to 5 per cent.
With a sale of not more than 900 electric bikes per month, as per the All India Cycle Manufacturers Association (AICMA), the GST cut may allow the bicycle makers to upgrade and start manufacturing E-bikes. Only 3-4 manufacturers in Ludhiana, the bicycle hub of the country, produce e-bikes.
The E-bikes, which runs on a battery, has seen a low success rate for several reasons. The price, ranging from Rs 20,000 to Rs 1 lakh being one. The other is lack of charging points.
“The reduction of GST on e-vehicles is a welcome step. While sales of e-rickshaws and e-autos are gradually picking up, that of e-bikes has remained slow. Lack of charging facilities, and the price factor remain the main reasons for it being less popular,” said Inderjit Singh Navyug, president, United Cycle and Parts Manufacturers Association (UCPMA).
KB Thakur, secretary general, AICMA, said, “Not more than 900 e-bikes are sold across the country per month. We welcome the cut in the GST, but we want e-bikes included in Faster Adoption and Manufacturing of Electric ( FAME-II) vehicles scheme of Government of India, under which four-wheelers, trucks, two-wheelers are included and incentives ranging from 10-20% are given to the manufacturers. If e-bikes are also included, their price will come down further, making it more customer friendly”.
Industrialists pointed out that battery, motor and controllers used in e-bikes are imported.
RD Sharma, owner of Safari Bikes that manufactures e-vehicles, said, “As of now, e-bikes are popular only in metros. Moreover, there are several misconceptions that need to be addressed. E-bikes can travel upto 150 km on a single charge. If the battery is drained out, the rider can pedal it like a normal bicycle”.
Badish Jindal, president of Federation of Small Industries Association, emphasised on creating dedicated cycle tracks.