Hybrid Vehicles To Be Given Incentives Under FAME II

To curb air pollution and costly oil imports, government plans to incentivise hybrid vehicles along with electric vehicles. The heavy industries department has readied a proposal to extend incentives under FAME II (Faster Adoption and Manufacturing of hybrid and Electric Vehicles), as a senior government official told ET.

INR10K per kWh of battery pack capacity would be given to all electric vehicles including plug-in hybrids (PHEVs) and strong hybrids. With the exception of buses, as the batteries cost is the main cause of cost difference of hybrid or electric vehicles and internal combustion engine (ICE) vehicles, the source added.

“It is estimated that the remaining extra cost of electric vehicles compared to equivalent ICE vehicles would be recovered in under three years by way of operational savings.” the official told ET.

Hybrid vehicle subsidies have been withdrawn and placed them under the highest tax slab of 28% of GST in 2017. Another cess of 15% is applied on hybrid vehicles, making it a total of 43%. Whereas, taxes on  electric vehicles was set at 12% to encourage car manufacturers to adopt electric mobility by 2030.

Japanese automobile companies such as Suzuki, Toyota and Honda have been pursuing Indian government to promote alternative fuel vehicles to curb pollution and oil imports. However, Mahindra & Mahindra and Tata Motors have opposed such promotions and advocated for direct transition to all electric vehicles.

In response, the government has shown interest in adopting a technology agnostic approach but has not shared any concrete plans.

According to the proposed policy,  INR20K per KWh incentive will be additionally determined for electric buses so that the difference in cost with ICE buses could be recovered in operational savings, said the of over six years, as told by an official.

The incentive amount proposed for buses will be considered for competitive bidding with the original manufacturers.  As industry insiders told ET, the incentives may help support adoption of electric technology among four-wheeler users but it will impact the affordability of electric two-wheelers.

[This development was first reported by ET]