The withdrawal of subsidy by The Ministry of New & Renewable Energy (MNRE) on March 31, 2012 has affected the sales of electric two-wheelers. According to manufacturers, the sale has come down by 70 per cent in the last three months and if the government does not take proactive steps, there are chances that the Industry may be in doldrums. The manufacturers are also facing closure of dealership. In last three months about 250 dealers closed their operations, out of 1250.
The manufacturers demanded the Government and MNRE to extend its support to the Electric Vehicle Industry to bridge the gap between the discontinuation of MNRE Incentive Scheme and National EV Policy by way of extension of MNRE Incentive Scheme till National EV Policy as it appears that if current scenario prevails, it would be difficult for the industry to revive even after National EV Policy kicks in. They demanded that for the current fiscal, the government should earmark Rs . 50-60 crore as subsidy component for the consumers.
According to the entrepreneurs, the electric vehicles which were selling around 7,000 units per month before April 2012, now has been reduced to 2,500-3000 units per month.
It is worth mentioning that according to the manufacturers the Society of Manufacturers of Electric Vehicles (SMEV) there are 16-17 electric two wheeler manufacture in India having combined installed capacity of 5 lakh unit per annum.
Speaking to Business Standard, SMEV & CEO, Hero Electric, Sohinder Gill said, "In November 2010, The Ministry of New & Renewable Energy (MNRE) announced a financial incentive scheme for Electric Vehicle buyers.
This incentive was passed on upfront by the manufacturer to the customer and was later claimed by the government. The scheme envisages incentives of up to 20% on the ex-factory prices of the vehicles, subject to a maximum limit. The cap on the incentive was –Rs .4,000 for low speed electric two wheelers, Rs .5,000 for high speed electric two wheelers".
" Due to introduction of the policy, EV industry saw 200% growth in its sales. The organized players saw a huge growth in the market share & the industry started to grow in an organized form. The Industry was selling around 75,000-110,000 units per annum. Last fiscal year, Electric two-wheeler sales in India was about 90,000 units,"he added.
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Avon Group, Chairman & MD, Onkar Singh said, " But on March 31, 2012, MNRE removed the subsidy from the sale of electric vehicles which resulted in over 70% fall in sales of EV’s.
Earlier we were selling about 7000 units per month, now it has been reduced to 2,500 units per month."
Besides that High VAT rate is also affecting the Industry., "States like Rajastan, Uttrakhand has brought down the VAT rate to zero, and also some states has brought down to 4 per cent. But there are states like Punjab and Haryana where the VAT rate is 12.5 per cent which is hampering the sales,"he added.