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Finance Minister Arun Jaitley today earmarked Rs 75 crore for faster adoption and manufacturing of electric vehicles in 2015-16, a step which electric vehicle makers termed as a good beginning.
"Government is launching a scheme for faster adoption and manufacturing of electric vehicles (FAME), with an initial outlay of Rs 75 crore," he said while presenting the Budget for 2015-16 in the Lok Sabha.
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Further, the concessional excise duty of 6% on specified goods for use in manufacture of electrically operated vehicles and hybrid vehicles, presently available up to this March, is being extended up to another year.
Reacting to the development, Society of Manufacturers of Electric Vehicles (SMEV), Director-Corporate Affairs, Sohinder Gill said, "It's like a life saver for the ailing companies who had invested into the environmentally friendly vehicles but were bleeding heavily because of the lack of government support."
In addition to supporting the industry, National Electric Mobility Mission Plan (NEMMP) will create a significant positive impact on the health index of country by promoting zero pollution electric vehicles and reducing the dependence on the fossil fuel.
Elaborating further, he said that the biggest beneficiary of the (NEMMP) will be companies manufacturing electric two wheelers and small electric cars, who have managed to survive through the difficult years and have been still active in the market.
"Although we are awaiting details, it is expected that around Rs 1,000 cr will be allocated for a period of two years, a large part of which will go directly into the hands of the customers in term of reduction of the prices of electric vehicles by around 20% and in installing charging stations in many cities," he added.
The government has an ambitious target of putting 5 million electric and hybrid vehicles per year on the road by 2020 under the NEMMP.
"A clear roadmap on GST, increased investment in infrastructure, agriculture investment and reforms, increased allocation to electric vehicles and a focus on skilled development will also support auto demand," said PwC India, auto expert and partner, Abdul Majeed.
The previous UPA government had launched the NEMMP 2020 in 2013. The targets were envisaged to result in substantial lowering of vehicular emissions and decrease in carbon dioxide emissions by 1.3% to 1.5% in 2020 as compared to a status quo scenario.
It was estimated that the government would need to provide support to the tune of Rs 13,000-14,000 crore over a period of 5-6 years to facilitate R&D and put in place charging infrastructure.
