Give more time for switch to electric vehicles

The tax incentive proposals for EVs contained in the Budget were not that substantive as to see customers queue up.

India’s first ethanol-powered motorcycle was unveiled last week, so too an electric car by an international manufacturer based in India while a new electric scooter also hit the market. Electric vehicles (EVs) are clearly gaining traction, but not at a rate that could possibly meet the overambitious conversion target set by Niti Aayog, which said most recently that 2023 and 2025 should be the cut-off dates for three-wheelers and two-wheelers under 150 cc to go electric. The sum total of all the initiatives towards switching to electric mobility solutions amount to less than one per cent of vehicles on Indian roads now. While the absolute transition cut-off date of 2030 sounds ambitious even for such a highly evolved industry as the Indian automobile industry, the deadline sought for the less powered three- and two-wheelers appears far too sharp. The proposed dates will be thrown open for discussion; even so, it is clear that automobiles are being targeted as major urban polluters.

The tax incentive proposals for EVs contained in the Budget were not that substantive as to see customers queue up. The country has a long way to go in setting up a nationwide recharging infrastructure, which will make electric mobility practical even as technology develops more compact batteries as well as quicker charging. The hurdles may appear overwhelming currently because we have hardly started towards true enabling of pollution-free transportation. Pilot initiatives look impressive enough in handling the minuscule numbers thus far. A total transition in India would take an enormous effort. Proper government-industry coordination and cooperation is essential if the transition is to have some effect on the urban heat island phenomenon that is running out of control in some cities, most notably in the National Capital Region where the problem of pollution is caused by far more than just automobiles.

The industry viewpoint of electric powered vehicles being brought in more by traders now rather than manufacturers would have to be factored in by the national planning body. So too the premise that India’s world class two-wheelers, which also contain a $3 billion export component, are not the most major polluters. The sharper deadline for the industry could prove counterproductive as India grapples with the larger issue of total transition possibly by 2030. While the operating cost savings for the user of EVs will be a distinct selling point, the salutary effect on urban pollution would be the most desirable outcome provided, of course, that cities are able to do a lot more to tackle other major contributing factors like industrial pollution and thermal power generation. The drop in GST on EVs to five per cent from 12 per cent plus the tax break might go some way towards incentivising what is an ideal transition from the internal combustion engine to other forms of driving mobility. A lot more is needed to make it all happen in a decade.

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