DNA Edit: Drive to the future – Subsidies are key to sale and manufacture of e-vehicles

In the Edit titled ‘Rupee Slips, Oil Costlier’, DNA had proposed that in the long term, India should move towards CNG and electric cars to decrease its dependence on oil. Prime Minister Narendra Modi’s mobility road map, seeking investments in manufacturing electric vehicles, reiterated that point. If electric vehicles haven’t yet taken off in India, one has only to blame the powerful automobile industry and the big oil companies that want to take the process of transition really slow. Earlier, while PM Modi had expressed ambitions of achieving a target of 30 per cent electric vehicles by 2030, Union Minister for Road Transport & Highways Nitin Gadkari felt that if 15 per cent of the vehicles on its roads are electric in five years, it will be useful for the country. India has been a laggard when it came to e-vehicles. 

While Cumulative passenger EV sales worldwide hit 4 million recently, in 2017 India sold a mere 2,000 vehicles. India is rapidly developing infrastructure. The government invested a record Rs 1.16 trillion in the 2017-18 financial year to develop highways and improve road connectivity across the nation. It plans to build 83,677 kms of roads by 2022 to boost economic growth and employment. More importantly, it is paving the way for auto manufacturers to make deep inroads into India to expand their customer base. The total vehicle sales in India during FY 2018 grew by 9.2 per cent with a total sales of 4.02 million units. If electric vehicles have to succeed, there need to be a host of incentives, including subsidies, much the way tractors come with much reduced price points. The government needs to rethink its stand of withdrawing fiscal subsidies from electric cars. Non-fiscal subsidies may not be enough to boost sales.