Government to subsidise Electric cars from April 2014

The Government of India is looking to offer subsidies on electric cars from April 2014, under the National Electric Mobility Mission Plan.

While the plan had been revealed earlier, it was stuck due to the economic slowdown. Now however, the Ministry of Heavy Industries is looking to have all subsidies sanctioned by April 2014.

Approximately, Rs. 12,000 crore will be set aside as incentives over the next 7 years, till 2020. The Government plans to provide an average of Rs. 2000 crore per annum as incentives and is in talks with the Finance Ministry to chalk out a plan as to how these incentives will be best passed on to manufacturers and customers.

There is a plan to offer incentives to manufacturers depending on the cost of ownership of the vehicle. A certain percentage of the difference in cost between an internal combustion engine car and an electric car will be offered. If sales of electric cars do take off, fuel worth Rs. 40,000 crore will be saved.

If the said subsidies are sanctioned, it will come as a relief to Mahindra Reva, the country’s only electric car manufacturer. Mahindra was considering putting its electric vehicle project on hold due to lack of direct subsidies, which was resulting in poor sales. Mahindra Reva has a production capacity of 40,000 vehicles per year.

Additionally, Tata Motors and Maruti Suzuki are also reported to be in the process of developing hybrid and electric vehicles. Similarly, TVS and Bajaj Auto are said to be developing hybrid two-wheelers and Kinetic is working on an electric three-wheeler.