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February 26, 2010 - 6:23 PM EST
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Electric vehicle makers upbeat on ‘Green' Budget
Feb. 26, 2010 (The Hindu Business Line) --
Our Bureau
New Delhi, Feb. 26
Electric vehicles (EVs) are set to become cheaper in the six to seven months as the benefits announced in the “Green” Budget 2010-11 on Friday take effect, says the domestic EV industry.
Catering to the demands of the nascent domestic EV industry, Finance Minister Mr Pranab Mukherjee has indicated towards a removal of the customs levied on imports of critical components used in EVs. Although a concessional countervailing duty will be levied at four per cent, this import duty reduction is believed to be hugely beneficial for the industry in the long-term.
“The Government has finally listened to the EV movement in India by encouraging domestic manufacturing. This is the first small step. The reduction in import duties from around 24 per cent to about four per cent is very encouraging. We can expect a fall in prices in the mid-term, maybe in 6-7 months,” said Mr Sohinder Gill, Director (Corporate Affairs), Society of Manufacturers of Electric Vehicles (SMEV) and CEO, Hero Electric.
Mr Dilip Chenoy, Director-General, Society of Indian Automobile Manufacturers said, “For alternative and new fuels, it is a very positive budget. It is a green and a consumer budget.”
The Government has also increased the excise duty on EVs to four per cent from zero, but the industry feels that this will actually be beneficial for it. This is because it will enable companies to avail of the MODVAT benefits, like subtracting the excise duties paid on the indigenous components from the total excise on the vehicle.
“The excise duty hike and the MODVAT benefits are actually very good for us. We can offset the excise that we pay on components through this,” said Mr Gill.
He said that in a case where the total excise levied on individual components add up to Rs 1,000 and the four per cent excise on the complete vehicle is also Rs 1,000, the company will only end up paying zero excise on the finished product after availing the MODVAT benefit.
Mr Gill added that the increase in the excise duty for all vehicles running on fossil fuels, which will lead to a price hike and also the increase in the price of fuel itself, will both have a positive effect on the popularity of EVs.
Mr Karl Slym, President & Managing Director, General Motors India said, “We're interested in making sure that such alternatives like EVs are incentivised. It a small step, a drop in the ocean and we need a lot more. Besides duties, we also need support for the vehicles.”
General Motors is developing electric powertrains in collaboration with Bangalore-based Reva Electric Car Company (OTCBB:ELCR) for use in its existing car platforms. The first car from this venture will be the electric Chevrolet Spark.
