New Delhi:
Unveiling government's plans for faster adoption of electric vehicles, Finance Minister Nirmala Sitharaman, in the Budget 2019-20 has allocated Rs 10,000 crore for the Faster Adoption and Manufacturing of Electric Vehicles (FAME II) scheme along with upfront incentives for buying electric vehicles.
In an effort to make electric vehicles more affordable, Finance Minister Nirmala Sitharaman has proposed to provide an income tax deduction of Rs 1.5 lakh on the interest paid on loan taken to buy EVs.
The Finance Minister also mentioned that the government has already moved Goods and Services Tax (GST) council to lower GST on electric vehicles from 12 percent to 5 percent
The main objective of the scheme is to provide necessary charging infra and incentivising easy and affordable mode of transportation for the common man, she says.This is the first time that electric vehicles have been proposed to become a direct tax beneficiary. The buyer of an EV can enjoy a total benefit of Rs 2.5 lakh over the purchase period, Sitharaman added.
The deduction in income tax is being looked at as a major boost for EVs, considering demand for such vehicles have been below expectations in recent months, especially after the government’s decision to withdraw benefits to vehicles not powered by lithium-ion batteries.
"We are launching interoperable transport card to be used for transport," she said.
Industry lobbying body, SIAM has already proposed a scrappage incentive scheme which takes old and polluting vehicles off the road. This will be a boost to renewal sales.
The Niti Aayog has recently moved a note to the Finance Ministry calling for the scrapping of all fossil fuel based vehicles by 2030. Most auto manufacturers are up in arms as they feel that a big shift in a short span of time would be too disruptive and tumultuous. Especially, in the current situation, auto companies do not have the capacity to take up such investments.
As per data shared by the Society of Manufacturers of Electric Vehicles (SMEV), sales of electric vehicles in FY19 grew to 7.59 lakh units from 56,000 units clocked in FY18. A majority of these came from electric three-wheelers, which saw sales of 6.3 lakh units.