Parliamentary estimates committee recommends tax incentives to boost EV adoption

The Parliamentary Committee on Estimates has recommended a slew of measures needed to boost the adoption of electric vehicles in the country. In its report on the Evaluation of Electric Vehicle (EV) Policy pertaining to the Ministry of Heavy Industries, the committee has recommended lowering, if not waiving, the road and good and services tax (GST) on EVs. In addition to this, it said that there is a need to offer financial incentives to those opting for buying EVs after scrapping their old internal combustion engine (ICE) vehicles.

“The higher upfront cost of EVs compared to ICE vehicles, inadequate charging infrastructure, range anxiety, dependence on imported e-vehicle components, lack of domestic lithium, need for a scraping policy for EVs, skilling of labour for servicing and repair of EVs, and fast-changing EV technology are some of the impediments hindering the faster adoption of EVs,” the 26^threport of this committee said, adding that efforts are required at all levels to increase public confidence on EVs.

The Committee raised concerns about the rising cost of EV charging stations being deployed under the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) scheme. It said that charging stations sanctioned under phase I of FAME India Scheme were much cheaper with an average cost of Rs 8.27 lakh per station than the charging stations sanctioned under phase II of FAME India scheme, which has an average cost of Rs 22.45 lakh per station.

“The Committee would like to know the reasons for such cost escalation of charging stations under Phase-II of FAME of India Scheme and also recommend that Government should conduct an audit to avoid any inefficient use of funds,” the committee recommended.

It has also been suggested that the centre frames a comprehensive National Policy on EV by incorporating the elements of successful State models and international best practices. This policy should take into account issues related to charging infrastructure, battery swapping, battery waste management and recycling, public awareness. The committee recommended that demand and supply side incentives such as lower GST, waiving road tax, registration fee, hire-purchase scheme at discounted interest rates by Financial Institutions for buying EVs should also be part of this policy.

Besides these, the committee said that the FAME II scheme needs to be extended for two more years beyond March 31, 2024.