Substantial subsidies for electric vehicles are no longer required: Gadkari

At the BNEF Summit, Union Minister Nitin Gadkari highlighted the lower GST rates on electric vehicles compared to those on petrol and diesel vehicles

Union Minister Nitin Gadkari on Thursday announced that there is no longer a need for subsidies in the electric vehicle (EV) market, as consumers are independently choosing to adopt EVs or compressed natural gas (CNG) vehicles.

Speaking at the Bloomberg New Energy Finance (BNEF) Summit, Gadkari said that while the initial production costs for electric vehicles were high, the increased demand has since led to a reduction in costs, making further financial incentives unnecessary.

"Consumers are now opting for electric and CNG vehicles of their own accord, and I believe substantial subsidies for electric vehicles are no longer required," the Minister for Road Transport and Highways added.

He also highlighted the lower GST rates on electric vehicles compared to those on petrol and diesel vehicles. "In my view, government subsidies for electric vehicle production are no longer justified," Gadkari said.

At present, electric vehicles attract a 5 per cent GST while internal combustion engines are taxed at 28 per cent.

Government prepares for FAME 3

Union Heavy Industries Minister HD Kumaraswamy, on Wednesday, mentioned that the government is expected to finalise the third phase of its flagship electric mobility adoption program, FAME, in the next month or two. He said that an inter-ministerial group is reviewing inputs for the program, working to address challenges faced in the first two phases of the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles (FAME) scheme.

FAME 3 will succeed the temporary Electric Mobility Promotion Scheme (EMPS) 2024, which expires in September.

Gadkari’s stance on diesel cars

Earlier this week, at a CII event, Gadkari strongly urged a shift away from diesel fuel and called on automakers to cease the production of diesel vehicles. He warned that if diesel vehicle production continues, he would implement heavy taxes to make it difficult for these vehicles to remain competitive in the market.