Green cars hit sops hurdle

Development of Environment-Friendly Vehicles (EFV) by Indian manufacturers is a ‘chicken and egg’ story.

While vehicle makers are looking for fiscal incentives from the government to support development of alternate fuel technologies such as hybrids and electric vehicles, the latter is awaiting development of “substantial” numbers of such vehicles before coming forward with any incentives.

S N Dash, secretary in the Union Ministry of Heavy Industry, told DNA Money that any decision on sops for EFV development would be taken after a meeting of the high powered ‘Development Council’ next month.

At present, there is hardly any incentivisation for EFV development other than some duty concessions for electric vehicles. Pending EFV incentivisation proposals include 50% subsidisation for indigenous development of hybrids. Also, programmes such as the National Hybrid Propulsion Programme (NHPP) and another one to develop an optimal mixture of CNG and hydrogen are hanging fire, largely because of lack of government funding.

Pawan Goenka, president of the Society of Indian Automobile Manufacturers (SIAM), admitted that the industry has not been actively seeking fiscal incentives for EFVs.

“Typically, a hybrid costs about $500 more than a comparable petrol/diesel vehicle. We can seek incentives only when the cost differential comes down substantially.”

EFVs comprise vehicles which use only rechargeable batteries (electric vehicles), a
combination of fossil fuels and batteries (hybrids), hydrogen fuel cells and vehicles which run on alternate fuels such as CNG, LPG, ethanol blended fuel and other bio fuels.

EVs are the only vehicle categories among EFVs with any incentives - they attract 0% excise across the country besides zero registration charges in Delhi.

A senior government official said that despite lack of policy initiatives for EFVs, India has a rather enviable position when it comes to environment friendly vehicle technologies.

Being a predominantly two-wheeler market, emissions are lower than other developing countries; new and stricter emission norms in BS IV are scheduled for implementation from April one next year in 13 mega cities.

The Ministry of Heavy Industry has earmarked a meagre Rs 25 crore annually for research & development of alternate fuels and technologies, but does not use up all the amount. Heavy industries minister Vilasrao Deshmukh said on Monday that he would consider lowering import duties for hybrids but it seems SIAM itself is not supporting such a proposal since it would discourage indigenous development of hybrids.