Welcome Move By The Govt, Will Give Hybrid Vehicles Same Incentives As EVs In FAME Scheme II

In its efforts to make the Indian transport greener and curb down on the oil imports, the government had largely ignored hybrid vehicles, framing its plans around EVs for the most parts. Not anymore though, as the heavy industry department has now come up with a proposal to bring similar incentives for hybrids as for EVs.

According to a senior government official, the proposal, to be implemented with the roll-out of the second phase of the FAME scheme, specifies incentives linked to battery size. A uniform incentive of Rs 10,000 per kilowatt hour (kWh) of battery pack capacity will be offered across all electric vehicles, including plug-in hybrids (PHEVs) and strong hybrids.

The move is aimed to bring down the cost disparity between hybrids and the regular gasoline variants of vehicles. As per an interaction with ET, the official mentioned ¡°With this, it is estimated that the remaining extra cost of electric vehicles compared to equivalent ICE vehicles would be recovered in under three years by way of operational savings.¡±

Reuters

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Earlier, the government had ended subsidies on hybrid vehicles and even clarified a higher tax slab for such vehicles, with 28% GST and 15% cess applicable on them. In comparison, EVs attract a tax of 12%, urging the car makers to focus on all-electrics.

The auto makers had a mixed reaction to this, as the foreign players in the market, already having hybrid offerings in the global market, wanted the government to subsidies the hybrids too. Meanwhile, homegrown makers like Mahindra & Mahindra and Tata Motors had pushed for a complete transition to EVs and skip hybrids altogether.

Reuters

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The official also states that a similar incentive is in works for electric buses as well. Rs 20,000 per KWh has been awarded, with an aim to recover the cost differential in relation to the IC engine buses within a period of 6 years.

These incentives, however, will be revised on an annual basis, as the cost of batteries for EVs is expected to be dropped down over time, resulting in more pocket friendly EV offerings in the country. In addition, the subsidies will also have an upper cap, to restrict luxury offerings availing them.