Government’s electric vehicle push put on slow lane to ease auto stress

With India’s automobile sector reeling under the effects of the worst sales slowdown in nearly two decades, the past few weeks has seen the Indian government significantly soften its electric vehicle (EV) push.

From Prime Minister Narendra Modi to Union Road Transport Minister Nitin Gadkari and Commerce and Industry Minister Piyush Goyal, the Centre has sought to allay the auto sector’s fears that a hasty push would come at the cost of conventional vehicles.

The Centre’s assurances have come just a few weeks after government think tank NITI Aayog proposed a ban on conventionally powered two-wheelers (below 150 CC) and three-wheelers by 2025 and 2023 respectively.

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While the Prime Minister had said there was space to grow for both ICEs and EVs and that both could co-exist, Gadkari has followed up with several assurances over the past few days that the government has no plans or deadline in mind to ban conventionally powered vehicles.

“The shift towards EVs will happen as a natural progression,” he reiterated at a conference on Thursday. Goyal had also pointed out that the NITI Aayog is a think tank, and not a policy-making body.

The NITI Aayog’s suggestion had led to an immediate outcry from the sector, with industry heavyweights like TVS chairman Venu Srinivasan and Bajaj Auto’s chief Rahul Bajaj criticising the proposal.

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“The auto industry globally is still a long way away from all of this, as is India,” Srinivasan had noted immediately after news broke, adding that “to force an unrealistic deadline for mass adoption of electric two and three wheelers, will not just create consumer discontent, it risks derailing auto-manufacturing in India that supports 4 million jobs”.

“The EV push is a noble cause, but the timing is all wrong. The transition cannot be done in as quick a time frame that NITI Aayog proposes. It also raises apprehensions on the amount of investment that has already gone into turning products BS-VI compliant, because what is the point if ICEs can no longer be made in just six years,” asked a senior auto sales executive.

Dealers also say the strong push towards EVs has played a part in turning customer sentiment away from conventional vehicle purchases as they fear their vehicles may be obsolete or banned in under a decade.
No wonder then that the ailing auto sector has welcomed the government’s recent assurances.

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“A technology-agnostic approach that encourages all options is very important for a developing country like India, which is dependent on fossil-based sources for much of its power,” Srinivasan had noted,  while Rajan Wadhera, president, SIAM, had said this was in line with the association’s stance that “all relevant technologies should co-exist in our journey towards sustainable mobility”.

Recent measures to boost EVs

The Centre has already rolled out several incentives to drive EV sales over the last year, with the Union Budget rolling out income-tax rebates of up to I1.5 lakh to customers on interest paid on loans to buy EVs, with total exemption benefit of I2.5 lakh over the entire tenure. The GST Council has also cut tax on EVs and EV chargers from 12 per cent to 5 per cent and 18 per cent to 5 per cent respectively.