Consumers opting for EVs, no longer need to be subsidised, says Nitin Gadkari

Union minister Nitin Gadkari

India's electric vehicles (EVs) market is growing rapidly and won't require incentives to promote sales, as consumers want to buy vehicles powered by cleaner fuels, road transport and highways minister Nitin Gadkari has said.

"In my opinion, manufacturing of electric vehicles no longer need to be subsidised by the government," the minister said during a Bloomberg NEF summit in New Delhi on September 5, adding consumers are keen to buy more EVs and CNG vehicles.

He further said that lower taxation on EVs under GST already provide an advantage to the makers of electric-powered vehicles, when compared to fossil fuel-based ones.

Gadkari said that the central government needs to find a solution to India's huge fossil fuel imports, but clarified that it won't lead to higher taxes on petrol and diesel cars.

The minister while speaking at the BloombergNEF Summit also said that he wants to encourage Indian automobile companies to increase manufacturing of cleaner vehicles like electric vehicles to reduce pollution levels and help cut fossil fuel imports.

Electric vehicle buses can go a long way in achieving the target of reducing fossil fuel dependence, Gadkari pointed out. "Use of electric vehicles in public transport especially electric busses will help reduce pollution levels and help cut fossil fuel imports."

The minister informed that the government is planning to launch inter-city electric buses soon.

However, he noted that even with government support, it will be difficult to reduce dependence on the fossil fuel-based economy because of its massive size.

"My intention has always been to encourage Indian automobile companies to encourage manufacturing of cleaner vehicles like EVs and not to make operations difficult."

Separately, the BJP leader pointed out that the country has now become the third largest automobile manufacturer in the world and with increase in local productions, the imports will decrease.

Moreover, with increased demands for EVs and rise in local production, India could become the largest exporter of lithium ion batteries in the next five years, the minister said.

Earlier this week, Gadkari, urged state finance ministers to advocate for a reduction in goods and services tax (GST) on flex-fuel vehicles at the upcoming GST Council meeting.

“We need support from finance ministers of different states. The (Union) finance minister assured me that we will try to convince all the finance ministers," Gadkari had said on September 3 while speaking at the India Bio-Energy & Tech Expo organised by IFGE in New Delhi.

In his speech Gadkari highlighted his recent discussion with the Maharashtra finance minister, where he proposed reducing the GST on flex-fuel vehicles, including cars and scooters, to 12 percent.

A flexible fuel vehicle (FFV), as its name implies, has the flexibility of running on more than one type of fuel. FFVs have an internal combustion engine and can operate on petrol as well as any blend of petrol with ethanol or methanol. Similar to conventional petrol vehicles, FFVs feature a single fuel tank, fuel system, and engine.

At present, vehicles powered by internal combustion engines, including hybrids, are subject to a 28 per cent GST, while electric vehicles are taxed at a lower rate of 5 per cent.

The sugar industry has been advocating for a 5 per cent GST on flex-fuel vehicles, similar to the rate applied to electric vehicles. However, some automobile manufacturers, who have heavily invested in electric vehicles, have reportedly opposed this rate-cut proposal in the past.