Union Minister Nitin Gadkari has made a significant statement regarding the subsidies provided by the government to electric vehicle (EV) manufacturers. The Minister of Road Transport and Highways stated that there is no longer a need to provide subsidies to EV makers.
At the BNEF Summit, Gadkari said, 'People are now choosing EVs or CNG vehicles on their own. Initially, the cost of manufacturing electric vehicles was higher, but as demand increased, production costs reduced, eliminating the need for subsidies.'
Currently, 5% GST Applies
The Union Minister further mentioned, 'I don't believe we need to provide more subsidies for electric vehicles. The GST on electric vehicles is less than that on petrol and diesel vehicles. In my opinion, the manufacturing of electric vehicles no longer requires government subsidies. The demand for subsidies is no longer justified. Currently, internal combustion engine-driven vehicles, including hybrids, attract a 28% GST, whereas electric vehicles are subject to a 5% GST.'
Reduction in the Cost of Electric Vehicles
However, Nitin Gadkari ruled out the possibility of imposing additional taxes on petrol and diesel vehicles. He said, 'Considering the size of India's economy and the energy needs, the shift from fossil fuels to alternative fuels will be a gradual process. The costs of electric vehicles will come down further as the cost of lithium-ion batteries decreases.'
EV Costs to Become Equivalent
He added, 'Within two years, the cost of diesel, petrol, and electric vehicles will be the same. Initially, the cost of EVs was very high, which is why we needed to provide subsidies to EV manufacturers. When asked if the government will extend the FAME scheme, Gadkari said that the FAME scheme subsidy is an excellent subject but it's not related to his ministry.'
What Did Kumaraswamy Say About FAME?
Just two days ago, Union Minister of Heavy Industries HD Kumaraswamy mentioned that the government will finalize the third phase of its flagship electric mobility adoption plan FAME within a month or two. An inter-ministerial group is working on the suggestions received for this plan.
