This year's Union Budget is likely to pump in some steam into the sales of electric bikes in the country that use imported batteries to power them.
The country does not have an indigenous manufacturer of electric batteries now, and they are mostly imported from China. Sohinder Gill, chief executive officer of Hero Electric said, "Currently,there is no indigenous manufacturer of electric batteries in the country. All batteries are imported."
Reading out the Union Budget of 2011-12, finance minister Pranab Mukherjee said that the full exemption from basic customs duty and a concessional rate of central excise duty of 4 per cent for specified parts of electric vehicles that was announced in the last budget would be extended to batteries imported by manufacturers.
This would result in a reduction of around Rs 1500 in the cost of an electric battery that now costs around Rs 6500. A consumer needs to replace the battery of his bike once a year. As Gill explains, reduction in battery cost is equivalent to reduction in fuel cost for an electric vehicle. "At the current rate of 22 per cent import duty, manufacturers can pass on the benefit to the consumers and reduce the cost of the battery."
If one drives his bike for 40 kilometers per day on an average, considering cost of petrol at Rs 60 approximately and the consumer using his bike for 300 days a year, the cost of fuel works out to be around Rs 18,000. "In case of an electric bike, the major cost is replacement of the battery, and cost of recharging is minimal. One can save around Rs 12,000 a year on an e-bike.", Gill says.
Most buyers are concerned about the replacement cost of the battery when they buy an e-bike, he adds. Bike makers expect a resurgence in demand for e-bikes thanks to the budget support, however, also feel that the pick up in sales would be a slow starter.
At present, e-bike sales is less than one per cent of the petrol two-wheelers sold in India. Around 90,000 e-bikes sell annually.
Jaisukh Patel, promoter of Ajanta Group that makes the Oreva brand of electric bikes felt that the move would definitely push the demand for e-bikes. He, however, felt that the longterm move should be towards indigenous manufacturing of electric batteries. Currently, no battery manufacturer delves into this segment as the volumes are low. Industry insiders noted that once volumes touch around 300,000 units a year, investment in specialised technology to make electric batteries becomes viable for battery manufacturers.