Feb 23, 2016 10:02 PM IST | Source: CNBC-TV18

Govt investment needed to popularise electric cars, says SMEV

SMEV President, Sohinder Gill, argues that the foremost issue is that while the government has been pushing hybrid vehicle technologies, it has left the electric vehicles segment in the lurch.

7 million electric and hybrid vehicles on indian roads by 2020. That was the dream when the Faster Adoption of Manufacturing of Electric and Hybrid Vehicles or FAME policy was announced in budget 2015 as part of the national electric mobility mission plan. But there's not been much progress on this front since then.

According to the Society of Manufacturers of Electric Vehicles or SMEV, in the first 10 months of fiscal 2016, sales of electric 2-wheelers and cars have tripled from 2014 levels to 23,000 units, which constitutes 21,000 units of electric 2-wheelers, and 2,000 units of Mahindra e20, india's only electric car. But this is a far cry from the earlier projected sales figure of one lakh vehicles.

SMEV President, Sohinder Gill, argues that the foremost issue is that while the government has been pushing hybrid vehicle technologies, it has left the electric vehicles segment in the lurch. He says, “There is a divergence of focus from electric to hybrid. It has to be brought back to electric which is a difficult process because there are various problems and barriers.”

Under FAME, the government has proposed an initial outlay of Rs 75 crore, and a commitment of Rs 795 crore over FY16 and FY17. They plan to then bring this figure up to Rs 14,000 crore by 2020.

But SMEV says the initial outlay is exhausted, and the additional investment of Rs 795 crore has not yet been cleared. Also, there is no signs of commitment on future investment. So, unless budget 2016 spells out the government's financial commitment to the plan for the next 5 years, private investments may also dry up.

But complaints are not limited to the funds. According to Arvind Mathew, CEO, Mahindra Electric, the government had made a commitment to put the charging infrastructure. But the government has been very slow to fulfill its promise.

SMEV hopes budget 2016 will take concrete steps to change this situation. Gill says, "The government should allocate a sepearate fund and develop a mechanism to spearhead the charging infra in atleast 100 citires across the country."

Poor financing for these vehicles is another big problem area. The EV industry says due to poor resale value, banks have been reluctant to provide loans for the purchase of electric vehicles. So, unless budget 2016 pushes loans for the purchase of electric vehicles are brought under priority sector lending, and directs public banks to offer loans at zero-interest rate, sales of EV are not going to pick up anytime soon.

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