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Indian Government To Offer Rs. 14,000 Crore Subsidy On Electric And Hybrid Vehicles

If you have always wanted to buy an electric or hybrid car, buying it after the Union Budget could be a good idea with prices of these vehicles expected to drop. The present government is set to provide subsidies in this green sector of automotive industry. In order to promote the use of green transport and automotive industry, the government is likely to implement a Rs 14,000-crore scheme to push green vehicles. Sources say that this subsidy will be a proportion of the difference between the price of a car running on fossil fuel and that of a green vehicle. Recently we reported the the Electric Vehicle Pioneers Tesla motors have made their patents available for use, free of cost for the noble cause of advancement of Green Transport technology. Among others, our very own Mahindra Reva has shown interest in making use of Tesla’s expertise and enter the Indian market. The subsidy from the Indian government coupled with the expertise and technology from Tesla could help the Hybrid Electric Vehicles pave their way to the garages and streets.


The heavy industry ministry, which has moved a proposal for clearance by the finance ministry, has suggested that the maximum subsidy of 35 per cent should be given to pure electric vehicles, while a 25 per cent benefit should be provided for plug-in vehicles that can drive for at least 15km at one go. Similarly, the purchase of mild hybrids will fetch you a 15 per cent subsidy, while a stronger version will get a 25 per cent 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(standard operating procedures), 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.¬†As of now a concrete timeline hasn’t been chalked out yet but we will keep you posted with further developments on this!