Govt readies Rs 14K cr subsidy for hybrid, electric cars – Times of India

Posted: Monday, July 07, 2014
NEW DELHI: Buying a hybrid or an electric car may soon fetch you a subsidy from the government, which is readying a Rs 14,000-crore scheme to push green vehicles.

The subsidy will be a proportion of the difference between the price of a car running on fossil fuel and that of a green vehicle, said sources involved with the discussions.

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The heavy industry ministry, which has moved a proposal for clearance by the finance ministry, has suggested that the maximum subsidy of 35% should be given to pure electric vehicles, while a 25% benefit should be provided for plug-in vehicles that can drive for at least 15km at one go.

READ ALSO: Green tax on vehicles now mandatory in UP — Experts

Similarly, the purchase of mild hybrids will fetch you a 15% subsidy, while a stronger version will get a 25% benefit.

Currently, only a handful of hybrid models are available in India which includes the Scorpio from the M&M stable, Toyota Prius, Toyota Camry in addition to electric vehicles such as Mahindra e2o.

If the ministry’s proposal goes through, the government will, for instance, provide a subsidy of around Rs 1 lakh on the purchase of a hybrid Toyota Camry, which costs around Rs 33 lakh in Delhi, while the one running on petrol is priced at Rs 28 lakh.

The government is hoping that the subsidy, which will routed through auto companies and will result in a reduction in prices, will encourage more Indians to shift to green energy. Although the scheme is expected to cost the exchequer Rs 14,000 crore till 2020, savings in fossil fuel usage has been estimated at Rs 60,000 crore over a six year period, said an official.

Several countries such as the UK, China, Germany and some states in the US and Canada had introduced sops, including subsidies and tax benefits, to promote electric vehicles.

Although the government discussed the plan in the past, it has failed to move on the proposal. It is only now that the heavy industry ministry has sent the proposal to the expenditure finance committee headed by the expenditure secretary. Sources said the ministry has also included the issue in its 100-day work programme submitted to prime minister Narendra Modi.

“The entire process, which will include cabinet approval, should take around two to three months,” said an official. But he refused to put any timeline on when the subsidy scheme will be in place.


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