Government to Give 20% Subsidy on Electric Vehicles

If you are planning to buy a new electric two wheeler, you may get some discount on its price. The Ministry of New and Renewable energy (MNRE) announced 20% financial incentive on the ex-factory prices of electric car and scooters sold in India.

The scheme is announced to promote use of electric vehicles and make electric vehicles competitive against other vehicles which run on petrol and diesel.

The highlights of MNRE scheme is as under:

  1. Under this scheme, electric vehicle manufactures will receive financial incentive of up to 20% on the ex-factory price for each electric vehicle sold in India
  2. The amount of incentive would be capped to Rs. 4,000 for low speed electric two wheeler, Rs.5,000 for high speed electric vehicles and Rs. 1,00,000 for the car.
  3. Manufacturers have to register with SMEV (Society of Manufacturers of Electric Vehicles) for availing the benefits of scheme.
  4. Registration would be provided on meeting eligibility norms like minimum 30% indigenous content in the vehicle, a sizeable operation in retail and after sales service and a multi point check system for accounting the retail sale.
  5. The scheme will come into immediate effect and will continue for the remaining part of the 11th plan means the rest of the financial year 2010-11 and for the financial year 2011-12.
  6. For the remaining financial year of 2010-11 the government will subsidies 20,000 units of low speed electric two wheelers and another 10,000 units of high speed two-wheelers. In 2011-12, the number would increase to 80,000 units to 20,000 units for low speed and high speed two wheelers respectively.

The notification says, the government will take up “dissemination of two-wheelers, three -wheelers and four-wheelers Battery Operated Vehicles (BOV) and R&D and technology demonstration and other activities in the area of Alternative Fuels for Surface Transportation at a total cost of Rs 95 crore during the remaining period of the 11th Plan”.

Sohinder Gill, director, SMEV said that the scheme could act like a life saving drug for the Electric vehicle industry, which has been stagnating since the last one year and it would be particularly beneficial for the electric two wheeler and small car category. He also add that the scheme could have an immediate impact on sales of electric two wheelers. In terms of monthly sales, he expect an immediate doubling of sales.

However, he added that the incentive is for manufacturers to invest in research activities and enhance capacities. But they are looking at ways to partially pass on the benefits to customers.

According to an Industry expert currently there are more than 4 lakh electric two wheelers on the road with annual additions of 85,000 units. The electric two wheelers are priced in the range of Rs 25,000 to Rs. 40,000 depending on the range (In terms of kilometer).

The MNRE scheme is majorly going to benefit electric two wheeler manufactures as they have larger base in terms of customer and sales.  Hero electric is market leader in Electric two wheeler industry. The other major names include Yo Bikes, Avon and BSA. Most of the manufactures are making losses so this incentive could help them to make profit and to remain in the industry.

– Mahavir Kothari