Cars to cost more, Rs 12000 tax on new cars

New Delhi, Dec 19: To encourage incentivise the use of electric vehicles (EVs) and manufacture of batteries, the government is planning a new plan to impose a levy of Rs 12,000 on a purchase of new petrol and diesel cars. The draft, say sources, is ready.According to a report in Times of India to ensure that the benefit is received by the buyer and not taken by automakers,officials have proposed kilometre-based incentives for state agencies operating e-buses.The NITI Aayog, the government’s apex policy think tank, has proposed incentives ranging from Rs 25,000-50,000 in the first year for those customers buying electric two-wheelers, three-wheelers and cars, government officials said, according to a report in the Times of India. The NITI Aaayog was given the job of the ambitious electric vehicle (EV) plan earlier.Meanwhile, the Heavy Industries Ministry has proposed reducing customs duty on parts of electric vehicles which are currently not exempt from import tariff to the Department of Revenue, according to senior officials.The tax structure entailing a one-year sunset clause was proposed by the Heavy Industries Ministry to the Finance Ministry in a meeting last week and is likely to be introduced along with the Rs 5,500 crore FAME India scheme entailing subsidies for all categories of electric vehicles, strong hybrid cars and for establishing charging infrastructure.The policy to boost EV adoption in the country will also entail a long-term road-map and vision to encourage domestic manufacturing of lithium-ion batteries."The idea is to encourage big original equipment manufacturers to bring CKD and SKD kits in India so that they can be assembled here and enhance the visibility of EVs. In order that Make in India gets a boost and does not suffer we have suggested sunset clauses," said an official.While government think-tank NITI Aayog is coordinating among related ministries for the proposals with regard to FAME-II, the Heavy Industries Ministry will implement the scheme once it is approved by the Union Cabinet."Battery swapping policy may lead to dumping of Li-ion batteries from China with no proper mechanism for their disposal. The duty on import of Li-ion battery is only going to increase so we are not going to encourage their imports," said another official."Reduction in the SKD and CKD rates for electric vehicles will be a welcome step in the direction of moving towards a cleaner energy option."However, we would be favourable towards promotion of local manufacturing of electric vehicles under the Make in India programme as such remedies would augment the adoption of EVs and showcase the government's long-term vision," said N Naga Satyam, Executive Director - Olectra Greentech Limited.

Based on a report in the Times of India and First Post (Pic Courtesy Internet)