To boost the sagging sales of electric vehicles, the government on Wednesday approved the extension of the Ministry of New and Renewable Energy (MNRE)'s subsidy scheme to incentivise sales of electric cars and two-wheelers in the country.
"Sales of electric vehicles have declined as much as 65 per cent since the discontinuation of the MNRE scheme in March. Today, it was decided this scheme would be extended till proposals for subsidies under the National Mission for Electric Mobility (NMEM) are formulated," said Naveen Munjal, president, Society of Manufacturers of Electric Vehicles.
With the extension of the scheme, Munjal expects sales of Hero Electric two-wheelers to rise in the coming months. "We sold 1,00,000 electric two-wheelers in the last financial year and, with this extension, expect to achieve similar volumes this year," he said. Hero Electric has a share of about 40 per cent in the electric two-wheeler market, which has about half a dozen companies.
Under the MNRE's subsidy scheme announced in November 2010, the government had set up a Rs 95-crore (Rs 950-million) corpus to provide incentives of up to 20 per cent on ex-factory
The cap on the incentive stood at Rs 4,000 for low-speed electric two-wheelers, Rs 5,000 for high-speed electric two-wheelers and Rs 1,00,000 for electric cars.
Under this scheme, the manufacturer would pass on the benefits to customers, while claiming a refund from the government later. Through this, Mahindra was able to slash prices of its Revai models by Rs 75,000- 3.5 lakh. Owing to the scheme, sales of both electric cars and electric two-wheelers doubled.
In March, the scheme was discontinued, when programmes under the 11th Plan period drew to a close. Since then, sales of the country's sole electric car, Revai, plummeted by two thirds to an average of about 25 units a month.
Pawan Goenka, president (automotive and farm equipment division), Mahindra & Mahindra, said, "We sold about 700 units of the Revai last year. Sales have dropped sharply since the discontinuation of the MNRE scheme to 20-25 units per month. With this extension, we hope sales would pick up in the coming months."
Currently, there are about 4,00,000 electric two-wheelers and 1,500 electric cars in India.
