The proposal seeks to impose a green cess of Rs 800-1,000 on gasoline two-wheelers to incentivise and bring on road a million electric two-wheelers in the next 2-3 years. More than 21 million two-wheelers were sold in India last year.
“Today, the price differential between a petrol and an electric twowheeler stands at Rs 55,000-60,000. The idea is to reduce this gap as much as possible by levying a small cess on vehicles which are polluting. The incentive will help promote widespread usage of electric two-wheelers and thereby address the concerns about rising crude oil imports and vehicular pollution,” said a senior official in the know of the development.
Interestingly, the proposal to impose a ‘green cess’ on two-wheelers has come at a time when industry veterans Pawan Munjal (chairman, Hero MotoCorp), Rajiv Bajaj (managing director, Bajaj Auto), Venu Srinivasan (chairman, TVS Motor Company) have called for a reduction in Goods & Services Tax (GST) rate on motorcycles and scooters.
In fact, prices may soon increase due to implementation of enhanced safety norms and transition to BS VI emission standards.
“If there are issues regarding the prevalent taxation structure, it has to be looked into separately. A price increase on account of the green cess may bring down incremental growth slightly. Sale of electric two-wheelers can compensate for that moderation in growth. But if the one million (electric two-wheelers) does not happen now, then the next four million will not happen, the supply chain will not happen,” said the official. Two-wheeler sales rose by 12.8% to 21.6 million units in 2018.
“There is now a convergence of views as far as the various government departments involved are concerned.
If promoted properly, we can quickly bring on road a million two-wheelers. And once the critical mass is attained, component makers will quickly start investing and manufacturing locally,” said Sohinder Gill, director general, Society of Manufacturers of Electric Vehicles (SMEV).
Large scale local manufacturing of components such as batteries, motor, controllers and power units will further help in reducing vehicle costs over the next few years.
Honda Motorcycle and Scooter India (HMSI) and TVS Motor Company declined to comment on the issue, while Bajaj Auto did not respond to queries regarding the proposal till presstime Tuesday.
Meanwhile, sources in the know said the Rs 5,500 crore earmarked for implementing the second phase of the FAME (Faster Adoption and Manufacturing of Hybrid & Electric Vehicles) India Scheme will be used for better public transport and support induction of electric buses by state governments.