The Government is set to launch the National Electric Mobility Mission Plan (NEMMP) 2020 early next fiscal. This will benefit companies such as two-wheeler maker Hero Electric and four-wheeler maker Mahindra & Mahindra.

“The Expenditure Finance Committee has approved the pilot programme. Once the Cabinet approves, we are ready to roll,” a senior Government official, who does not wish to be identified, told Business Line. The Government plans to spend Rs 1,000 crore in the first year on the programme.

The plan was formulated in 2011 and aims to provide subsidies worth ₹14,000 crore to electric vehicle manufacturers over the next six years. The target is to sell six-seven million electric and hybrid vehicles, including four-five million two-wheelers and save 2.2- 2.5 million tonnes of liquid fuel by 2020.

The mission aims to incentivise companies making e-vehicles and hybrid vehicles, which would be in form of subsidy on capital. “The formula for subsidy implies giving subsidy amounting to one-third of the differential,” the official said. Here the differential means the price difference between a normal car and an electric or hybrid vehicle. If the difference is Rs 3 lakh, the subsidy amount would be Rs 1 lakh. The view is that the remaining two-third will be compensated through savings on the fuel cost subsidy, based on the sales details submitted by companies. Companies will provide invoices and accordingly be reimbursed.

Sohinder Singh Gill, Chief Executive Officer (Global Business), Hero Electric, said this is a good step as the industry has been seeking such subsidies. The decision would give the electric vehicles industry a fillip, which is not in a good state right now. “It may take some time to implement the policy, but will help the industry to launch more vehicles in the near future, especially high-speed electric scooters (above 45kmph),” he said.

He said the existing subsidies – 15 per cent on the maximum retail price (MRP) and zero per cent on value added tax (VAT) – are just limited to certain States, which were not of much help to manufacturers. Therefore, approval by the Expenditure Finance Commission will help many manufacturers, he added

Through this plan, the Government will set up a centralised (computerised) system that would be integrated with the manufacturers and the subsidies would be directly provided to them (manufacturers). According to Gill, India sold only around 20,000 e-vehicles in 2013-14, as opposed to 42,000 units in 2012-13.

According to analysts, the decision would certainly help companies like Mahindra & Mahindra, which has big plans on manufacturing electric cars. The company, after acquiring Reva, has very low sales of the e2O car because of its price (around ₹7 lakh on road). The company also plans to convert some models, such as Verito, Bolero and Scorpio, to e-vehicles because of the technology available with Reva.

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