Centre to soon subsidise hybrid cars: Report

Reversing its previous stand of not subsidising hybrid cars, Centre may soon bear the cost for such cars as Department of Heavy Industries (DHI) is believed to have asked for a Rs 13 crore corpus for the same.

“In a meeting with the committee on 23 August for the second phase of the Faster Adoption and Manufacturing of Electric and Hybrid vehicles (FAME) scheme, the department sought incentives for potential buyers of 10,000 hybrid cars fitted with lithium-ion batteries of 0.5-2 kilowatt hour (kWh),” Mint reported.

The financial daily said that the Department sought the amount after automakers such as Toyota, Maruti Suzuki and Honda intensively lobbied for subsidising hybrid cars. The automakers are unhappy with the cars being put in the highest tax bracket of 28 percent under goods and services tax (GST) regime.

The report quoted RC Bhargava, chairman, Maruti Suzuki India saying that the government has realised that direct shift from IC cars to electric is not possible.

Also read: Electric vehicles: Government raises incentives under FAME-II to Rs 5,500 crore

“Electric vehicles alone will not be able to solve the problems of oil imports and rising pollution,” Bhargava said adding that if “10-15 percent of cars are converted to electric, then something has to be done for the remaining 85 percent”.

The government had, last year, decided to tax electric cars at 12 percent, showing its preference towards electric cars.

DHI had earlier received nod from the finance ministry for Rs 5,500 crore fund to subsidise manufacturing for electric cars. Of this, Rs 1,000 crore was to be spent on setting up charging stations.

The idea, however, received red flag from the PMO as it wanted to figure out way to make batteries cheaper rather than subsidising manufacturing of such cars.