'No need for electric vehicle subsidies,' says Union Minister Nitin Gadkari

Mid-day

Union Minister Nitin Gadkari remarked that the government no longer needs to provide subsidies for electric cars (EVs). Speaking at the BNEF Summit, Gadkari stated that as demand for EVs has grown, production costs have fallen, making subsidies superfluous.

Initially, the high cost of manufacturing EVs required incentives to stimulate uptake. However, as more consumers choose EVs and compressed natural gas (CNG) vehicles, the demand for subsidies has decreased, reported PTI.

Speaking at the BNEF Summit, the road transport and highways minister said, "Consumers are now choosing electric and compressed natural gas (CNG) vehicles on their own and I do not think we need to provide much subsidy for electric vehicles."

Gadkari pointed out that electric vehicles currently benefit from lower GST rates than petrol and diesel automobiles.

"In my opinion, manufacturing of electric vehicles no longer needs to be subsidised by the government. The ask for subsidies isn't justified anymore," he said.

Currently, automobiles powered by internal combustion engines are subject to 28 per cent GST, whereas electric vehicles are taxed at 5 per cent.

Union Minister Nitin Gadkari also ruled out levying more tariffs on petrol and diesel vehicles, stating that the transition to alternative fuels will be gradual due to India's large economy and energy needs. He also anticipated that electric vehicles would become more inexpensive as lithium-ion battery prices dropped.

Gadkari predicted that within two years, the cost of electric vehicles would be comparable to that of diesel and petrol automobiles. Initially, electric vehicles were expensive, necessitating subsidies for manufacturers.

When asked about expanding the FAME plan, Gadkari stated that it was not within his ministry's purview. However, Union Heavy Industries Minister H D Kumaraswamy stated that the government intends to complete the third phase of the FAME initiative within a month or two.

The FAME 3 program attempts to address shortcomings raised in previous phases and will replace the temporary Electric Mobility Promotion program (EMPS) 2024, which is slated to expire in September. An inter-ministerial panel is reviewing inputs for the scheme, including ideas from the Prime Minister's Office.

Kumaraswamy noted that the schedule for FAME 3 is expected to be within a month or two, with the proposal being submitted to the Union Cabinet for approval once all ideas have been considered.