After lackluster festival season sales, Indian carmakers are in for another rough ride. In a push to promote electric vehicles, the government is planning to impose a tax on new petrol and diesel cars.
Using the ‘polluter pays’ principle, the government wants to impose a tax of 12,000 rupees on those buying petrol and diesel cars, while providing incentives to electric vehicle buyers.
This tax will be used to subsidize electric two-wheelers, three-wheelers and cars.
While the new policy, proposed by planning body NITI Ayog, awaits ministerial clearance, RC Bhargava, the chairman of Maruti Suzuki, the country’s largest car manufacturer with more than 50% market share, said the tax will not serve its purpose.
He said while electric cars continue to be expensive, the proposed tax will have an impact on sales of small cars and the lower middle-class people who buy them. The subsidies for electric cars will go to well to do people, Business Standard reported him as saying.
Bhargava also asked why only cars should be subjected to a tax, known in India as a cess, to promote electric vehicles. He pointed out that two-wheelers consume two-thirds of the country’s petrol and they should not be left out in the electrification drive.
When asked about Maruti Suzuki’s plans for electric vehicle, he said the first electric car would roll out in 2020. One of the company’s popular models, the Wagon R, is now undergoing trials and will be launched in 2020.
As for the electric car market in India, Mahindra & Mahindra has a first-mover advantage and the company plans to make 60,000 electric vehicles annually from 2020. The Indian unit of South Korea’s Hyundai Motor Co Ltd is expected to launch its electric vehicle in 2019.
Tata Motors has developed the technology. Many two-wheeler firms have also invested in developing electric products.
At the end of 2016-17, the electric vehicle market in India was about 25,000 units. Of the total number of electric vehicles sold, nearly 92% were two-wheelers, while electric cars and four-wheelers accounted for less than 8% of total sales.
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