The suggestion for sops to BS-VI, hybrid vehicles came from WB finance minister Amit Mitra
After electric vehicles (EVs), the government is exploring the option of giving tax breaks on the purchase of low emission Bharat Stage VI and hybrid vehicles.
The suggestion to consider tax incentives for upcoming BS-VI petrol and diesel vehicles as well as hybrid vehicles on the lines of EVs was made by West Bengal finance minister Amit Mitra during the recent Goods and Services Tax (GST) Council meeting held through video-conferencing on Saturday. The idea was “well taken” by finance minister Nirmala Sitharaman, who chaired the meeting where the tax rate on EVs was reduced from 12% to 5% and on charges from 18% to 5%, officials privy to the development said.
During the meeting, Mitra made a point that the government should consider giving tax incentives similar to EVs to help the industry make a transition from BS-IV to BS-VI emission norms by April 2020.
SOPS DRIVE
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- The suggestion for sops to BS-VI, hybrid vehicles came from WB finance minister Amit Mitra
- Mitra said that if help is not provided, the auto sector may stare at job losses
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The industry is facing a slowdown at a time when the sector has to invest more in creating infrastructure. Auto companies, along with the ancillary units, employ around 3.7 crore people and contributes 6-7% to the country’s Gross Domestic Product (GDP). Mitra said that if the government doesn’t provide help to the sector, it may go down further to a point where it may be staring at job losses.
The auto industry is facing a slowdown, with sales declining sharply month after month. The slowdown started in September after the financial crisis at IL&FS led to a liquidity shortage in the consumer durable and automobile segments.
Mitra told the meeting, which was attended by the state finance ministers, that the adoption of EVs will happen slowly as the technology will take time to develop. Meanwhile, the auto sector should stay competitive as it is one of the major contributors to employment and economic growth, he said. Mitra said that apart from encouraging faster adoption of EVs, the government also needs to support the auto sector to move on to the next phase of producing lower emission vehicles.
The adoption of BS-VI petrol and diesel vehicles should be promoted as it contributes towards a clean environment. However, with most thermal power plants being coal-fired, the plants will produce significant pollution, as the demand for EVs goes up, according to Mitra. Currently, the share of electricity generated from coal-based power plants is 72%.
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