Green cess on polluting vehicles

NITI Ayog has directed the IC engine companies to come up with plans for manufacturing electric vehicles; deadlines have been provided for the same too.
Sohinder Gill, Director General, SMEV and Global CEO, Hero Electric

Sohinder Gill, Global CEO, Hero Electric and Director General, SMEV in a discussion with Athira Bejoy shares how the government should cease using the taxpayers’ money for government investments and how implementing green cess on polluting vehicles act as a backbone for the government’s initiative to balance the finances for electric vehicle industry.

You recently urged the government to impose green cess on polluting vehicles, while supporting the Electric Vehicles for a clean air campaign. How effective will that be implemented and how far will it accelerate the mobility of India?
India has surplus capital to roll out subsidies and secondly, why should money of taxpayers be used for government investments. This investment will increase the demand of subsidiaries from the tax payers at large. In case of electric mobility, petrol and diesel, there is a genuine interest of vehicle owners. Moreover, it’s a matter of national payment. ₹1000 cess on a motorcycle would suffice, as there are over 2 crore petrol based motorcycles and scooters being sold, and the said ₹1000 cess will amount to ₹2,000 crores.The government must employ these funds, rather than utilising tax payers’ money. I think, ₹500 crores would be suffice to boost the Clean Air campaign, under Swachh Bharat campaign. To implement these things, the government will have to work on the budget of before and after implementation, and the green cess will play a key role here, as they will have accumulated funds to fund the initiative and improve the electric mobility.

The most important part is that the 2-wheeler customers, of today, are not opting for electric bikes, despite realising that this alternative would preserve the environment and save their money. Apart from that, the subsidiaries in the electric scooter is costlier by ₹20,000 – ₹30,000 as compared to over petrol scooters. The government doesn’t have enough capital to bridge this gap, as industries are already incurring losses and the government has already provided some subsidiary to them. Here, green cess shall act as a backbone for the government’s initiative to balance the finances for these two years, and would offer fair priced vehicles to the consumers.

How success were you in convincing the government to agree for this initiative?
In a democratic country like India, there are always opinions and counter opinions. The huge population of IC engines market players are concerned about boosting sales in the wake of elevated prices.Impositionof an additional ₹1000 would kill the industry. Though such concerns will continue pouring in, the government is quite firm on enhancing mobility. To implement that, they have to take harsh decisions; opinions and thoughts are already being exchanged within the government and the opposition; although no decision have been made yet on this.

Lower subsidy under the Fame II scheme has said to impact electric two-wheeler industry. How do you view this? What needs to be done to incentify the customers?
Since, the subsidiary has already been reduced under the green cess, the sales have further taken a hit. Earlier, the sales of electric two-wheelers werelike around 100,000 and 125,000 per year, equating a monthly sale of around 10,000 vehicles. However, since the last 3 months, the sale has been zero and the subsidised sale is even less i.e. 500 vehicles. Because it’s such a price sensitive product, people would buy them only if you price them anywhere between ₹45,000 – ₹50,000, but if you elevate the cost to ₹65000 – ₹ 70,000, there won’t be any buyers. So, lower subsidiary has already dismantled the industry temporarily. So now, it’s imperative to incentivise the customers.

How is the electric vehicle contributing towards making India an electric country by 2030 in the wake of NITI Aayog proposing that only electric vehicles should be sold after 2030?
No one knowswhat will happen after 13 years from now. I think we should be talking to the government to consider what’s to be done for the next 12 – 24 months’ time; to move ahead or to progressively move towards the targeted direction.

Our situation, right now, is entirely opposite to the situation at the time it was announced. So, we can’t even assume what will happen by 2030. Maximum we can do is, either retarget or restructure the objective of achieving 50-60 per cent of electric vehicles by this many years, which is unlikely. We must always think about the steps to be taken in the coming months, so as to start selling some volume out of it. So I think, a workable short term target is more imperative.

What steps will be taken by the government to ensure that a customer gets inclined towards electric vehicle?
Government cannot shut down the IC engines market. We all are waiting for some concrete steps to be implemented by the government for incentivising the customers, or bringing in a mandate or clean air campaign, easy loans to change the customer’s mind-set;remember the customer mind-set is still not inclined towards electric. That will happen when the industry or the government will offer them a quality electric vehicle ranging between ₹45,000 – ₹50,000 for a period of one year. If you take up this opportunity, then at least 10-20 per cent people will talk about the brand availability as they will realise that they won’t have to fuel their vehicles every other time, as the battery of these electric vehicles will last for 3 – 4 years.

Are there any wider consultations being done with the stakeholders or the manufacturers before the target and timeline for electric vehicles are set?
Recently, we had a fruitful meeting with the NITI Aayog, SIAM, and the petrol manufacturers’ vehicle makers. In the last meeting, NITI Aayog had framed a deadline for the IC engine two-wheeler industry, that in two weeks’ time, the IC engine companies must come back with plans for manufacturing electric vehicles. Earlier, there was no such statement; however, now, they are insisting auto makers to increase the manufacturing of electric vehicles.

Taxes for the electric vehicles aren’t been reduced yet?
Tax issue is already being discussed among the government, like GST reduction, RTO, registration charges. But all this together doesn’t incline the balance of price parity, for example, the road tax for the last 7 – years, is 2 per cent or less in several states of India for the electric vehicles. That has already been factored into the pricing. Similarly, GST difference between 12 per cent and 5per cent is amounting to around ₹4,000. The gap is minimum of ₹20,000-₹25,000, so these initiatives will certainly help in future, but they are not the only necessary steps.