Ministry seeks GST waiver for e-vehicles
New Delhi: The Union ministry of heavy industries (MHI) has suggested doing away with GST, road tax and parking fee for electric vehicles, and sought an allocation of Rs 12,000-13,000 crore to strengthen the thrust on developing green vehicles.
The ministry made the pitch before cabinet secretary PK Sinha and other government agencies earlier this week. The demand for zero-rate GST – as opposed to the proposed 12% on electric vehicles – came days before the meeting of the GST Council, comprising Union and state finance ministers, scheduled for Sunday. Revision of the rates for some goods is already on the agenda for the meeting. However, the demand so far was to either reduce the duty on hybrids or increase the levy on SUVs, which will face 43% GST.
At the same time, sources told TOI, the MHI has made a strong pitch for indigenisation and said that no tax concessions should be offered for imported electric vehicles in order to encourage the development of technologies suitable for the country.
The demands for enhanced budget support follows a low allocation from the government for the first phase of the electric vehicle project. Originally, the scheme to push electric and hybrid vehicles, named FAME, envisaged a budgetary support of Rs 14,000 crore for five years till 2020. The estimate finance committee had approved Rs 795 crore for a two-year pilot project. But only Rs 219 crore has been allotted in two years.
Moreover, a good share of this fund has been used up as subsidy for the “mild hybrid four-wheelers”, which come with a start-stop switch but enjoy the same benefits as genuine hybrids. In fact, the auto industry has been critical of Maruti Suzuki and Mahindra’s offerings, several of which are “mild hybrids”.
Of the 1.22 lakh vehicles which received support, over 81,000 were “mild hybrids”. Official numbers show that fully electric two-wheelers or e-bikes were the second-highest chunk with 37,820 such vehicles receiving government allocation. There has been little progress in deploying other electric vehicles although there are ambitious plans to run a fleet of electric buses.
“Until and unless we have availability of cheaper battery, things are not going to change fast. If we end up depending on China for batteries, then it does not serve the purpose. We have to have indigenous technology and mass production of battery to bring down prices,” said a government official.
The heavy industry department has suggested that the government allow using corporate social responsibility (CSR) funds to support electric mobility.
Spac e research organisation Isro, which has developed lithium ion battery technology, has also agreed to share the technology with private players for mass production.