I am not against incentives. If MoHI (Ministry of Heavy Industries) and MoF (Ministry of Finance) want to roll it and it will benefit, I don't have any problem. I will not oppose it, he said, while speaking at the 64th ACMA Annual Session.
However, the Minister added that with falling lithium battery cell prices since last year the cost of production of EVs has come down and it can be maintained even without subsidies. “I feel that within two years, the cost of the petrol and diesel vehicle will be the same like EVs."
At one point the price of the lithium ion battery was USD 150 per kWh, which is now at about 110 per kWh. "I am confident it will come to USD 100," he said.
The clarification comes as last week while addressing the BNEF Summit, the Minister suggested that subsidies to EV makers are no longer needed. "Consumers are now choosing electric and CNG (compressed natural gas) vehicles on their own and I do not think we need to provide much subsidy for electric vehicles," he said.
Currently, India levies 5% GST on EVs (electric vehicles), while the tax on hybrids goes over 40%. The overall EV penetration in the country in FY24 stood at 6.8%, as against 5.3% in FY23.
At the ACMA Session, Union Minister of Heavy Industries HD Kumaraswamy said that the EMPS (Electric Mobility Promotion Scheme), will be extended till FAME-III is finalized. EMPS is a temporary scheme which was introduced from April 2024 to be applicable to July 31 to promote the sales of electric two wheelers and three wheelers. It was launched with an outlay of INR 500 crore. Later it was extended till September 30, with a total outlay of INR 778 crore.
At an event last week, Kumaraswamy said that the third leg of the FAME scheme will be rolled out by the next two months.
Gadkari further pointed out that in order to capture the market and increase their share, OEMs will have to provide options in fuel technology. "This is the time to change as per the market and choice of the people. We should go for fuel technology that is cost effective, pollution free and indigenous. Those who can understand and are able to alter their strategies can get good orders," he said.
The Minister further highlighted that the future of this industry is very bright. He also said India has an advantage in terms of low labor cost and young talent pool, when compared to other countries.
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