The state government of Gujarat has moved backwards on its commitment to contribute towards making the Environment clean with the recent passing of a Bill to increase VAT from 5% to 15% on Electric Vehicles with effect from August 1, 2009.
This move by the state government runs against its earlier commitment to make Gujarat a pollution-free state that inclined towards the adoption of greener transportation technologies like Electric Vehicles.
In 2008, the government had taken a step forward by providing tax rebates in the form of VAT reduction from 15% to 5% for the adoption of greener transportation like the Electric Vehicles in the state. The step had encouraged citizens of Gujarat to adopt electric vehicles since they are eco-friendly with no forms of pollution (noise or carbon emissions among others), apart from being very economical, with lower maintenance costs and a reduced dependency on fossil fuels.
In a short span, the state became one of the biggest markets for Electric Vehicles setting a benchmark for other state governments to follow.
Electric vehicle manufacturers had enhanced their focus on Gujarat with investments to strengthen distribution networks, apart from creating greater awareness about the benefits of electric vehicles.
With the increase in the VAT on electric vehicles, the Gujarat Government has now fallen back on its promise and this step is a huge setback for electric vehicle manufacturers, which could now soon hold back their plans and scheduled investments in Gujarat.
States like Madhya Pradesh, Chhattisgarh, Andhra Pradesh, Kerala, Orissa, and West Bengal among others have rationalised VAT from 12.5% to 4% on Electric Vehicles. Even the Delhi Government has taken a step further by reducing VAT on Electric Vehicles from 12.5% to 0%, in addition to a subsidy of 15% and exemption of Road Tax.
The SOCIETY of MANUFACTURERS of ELECTRIC VEHICLES (SMEV), which addresses the interests of the Indian Electric Vehicle Manufacturers and comprises 30 members, had in fact made a representation to the Gujarat Government for providing a 15% subsidy on Electric Vehicles, in addition to a further reduction in VAT, as is the case in Delhi.
However, with this new move by the Gujarat government to re-impose higher VAT at 15%, the whole objective of promoting an environmental-friendly transportation infrastructure is defeated.
The SMEV feels the Gujarat government’s new move to re-impose higher VAT on electric vehicles is highly de-motivating and remains unclear about the government’s objective behind the decision.
While electric vehicles manufacturers are committed to the clean ecology platform. Electric vehicles can address many problems like fuel shortage and pollution. The surest way to reduce vehicular pollution within city limits is to push up the sale of electric vehicles.
It is clear that government support is the answers to many of the challenges faced by the EV industry and also help in increased adoption of electric vehicles.
The state government can provide a boost to the electric vehicles industry through subsidies and policy measures like VAT reduction. These incentives will help motivate consumers to switch to electric vehicles and, in the process, help states in their drive to be environment friendly. Electric Vehicles are also safe, pollution free and an economical mode of transport.
In comparison with conventional automobiles, electric vehicles have a great advantage when it comes to reducing the consumption of fuel. Electric Vehicles can cut gas consumption by up to 100% and they are 97% cleaner as compared to petrol/diesel driven vehicles and are also 60% more energy efficient.
ABOUT SMEV
The SOCIETY of MANUFACTURERS of ELECTRIC VEHICLES (SMEV) has been formed to provide a common platform for the promotion and development of the interests of Electric Vehicle Manufacturers, the Industry and key stakeholders that contribute to the category in India. The SMEV will provide leadership for the EV industry.
The SOCIETY of MANUFACTURERS of ELECTRIC VEHICLES (SMEV) is based in New Delhi and comprises around 30 members from across the following categories:
- Electric- Four /Three Wheeler Manufacturers
- Electric- Two Wheeler Manufacturers
- Electric Vehicle -Auto Components Manufacturers
Traditional and National electric manufacturers like HERO Electric, Electrotherm, REVA, BSA Motors, AVON, apart from regional manufacturers are members of the SMEV.
