India’s EV Push May No Longer Need Subsidies: Nitin Gadkari

Union minister for road transport and highways Nitin Gadkari has said that he doesn’t have any objection to subsidies for electric vehicles (EVs) from the finance and heavy industries ministers.

Addressing the 64th ACMA annual session, the minister highlighted how the costs of EVs are expected to align with those of petrol and diesel vehicles in two years, making additional financial incentives redundant. 

This comes a few days after Gadkari suggested that subsidies to EV makers are no longer needed. He cited reduced prices of lithium ion batteries and the increase in the number of EV manufacturing as the reasons for the same.

“Initially costs of manufacturing electric vehicles were high, but as demand has increased, production costs have dropped, making further subsidies unnecessary,” the minister said.

“Consumers are now choosing electric and compressed natural gas (CNG) vehicles on their own and I do not think we need to provide much subsidy for electric vehicles,” he said, pointing out the lower rate of GST on electric vehicles (5%) compared to petrol and diesel vehicles (28%).

Even with the government aiming for EV penetration to reach 30% by 2030, EV adoption for both two- and four-wheelers has rather remained sluggish. 

On the broader EV adoption front, the cumulative EV sales in India reached 41,35,077 units by the end of FY2024, as per a report by JMK Research and Analysis. 

In FY24, the EV sales surpassed the 1.7 Mn mark with over 55% of the share coming from registered e2Ws, followed by passenger electric three-wheelers (E3W P) with 32% market share.

Total EV two-wheeler registrations also fell to 88,473 units last month from over 1.07 Lakh units registered in July, as per Vahan data as of September 2. However, the registrations rose 41% compared to 62,782 units in August 2023.

Amid all these, the government has been introducing several initiatives to boost EV sales. Earlier this year, the Ministry of Heavy Industries introduced the INR 500 Cr EMPS 2024. It is a stopgap scheme aimed at helping the EV industry with demand subsidies following the end of the FAME-II scheme and before the launch of the FAME-III scheme.

Moreover, startups in the EV segment are either planning to or have entered the brouses recently. While Ola Electric made its EV debut in August this year, its counterpart Ather Energy is also reported to be gearing up for its IPO.