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West Bengal finance minister urges calibrated rollout of electric vehicles

Amit Mitra says sole agenda of the next GST Council meeting will be on EVs

Avishek Rakshit  |  Kolkata 

Cutting the cost of batteries is arguably the industry’s most urgent challenge. They account for a huge chunk of the cost of an electric car—between 35% and 45%, according to McKinsey
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West Bengal finance minister on said on Wednesday that the move towards rolling out electric vehicles (EV) in the country needs to be done in a calibrated manner, while lowering existing GST rates on BS VI-complaint and hybrid vehicles.

Mitra said that instead of giving a sudden push to EVs, the Centre should focus on the entire eco-system of the automobile industry and implement a sustainable transition in adoption of EVs, without loss in employment or setback to the auto sector. He added that support needs to be extended to the traditional industry to move towards better emission standards.

“Incentives should be for better technology, higher emission standards and a steady improvement towards zero emission”, he said.

The GST on EVs has been sought out to be reduced from the existing slab of 12 per cent to five per cent, which expectedly will trigger huge investment as automotive makers will strive to create the desired infrastructure to move from fossil fuel based vehicles to electrical ones which will help curb pollution.

However, Mitra differed pointing out that EV rollout will trigger huge demand for electricity in the country and since power is currently produced from coal sources, a higher energy demand will in effect raise greenhouse emissions.

The minister claimed that the forthcoming GST Council Meeting has been convened on this single agenda of EVs.

According to Mitra, nearly Rs. 1.7 trillion has already been invested by the automobile industry over technological upgrade as India is moving over to BS VI emission norms and this sector employs around 37 million people.

“Countries like Ireland and UK have set a target of 2030 and 2040 respectively to achieve zero emission. Even China took 20 years in this attempt to transform and did it first in one city before slowly expanding over time”, Mitra said.

He claimed that currently, there are 5.6 million EVs globally and even in developed countries like the US, electric vehicles account for only 2.1 per cent of total vehicles sold there, and about 2.5 per cent in the UK. Even in China, EVs account for only 4.4 per cent of the total vehicles sold in that country.

Lashing out at the NITI Aayog for being a “mere think tank without statutory or financial powers", Mitra said that its directive to auto industries to switch to EVs by 2025 was impractical and draconian and several issues including absence of EV charging infrastructure, high cost of lithium ion battery and its import, lack of supply chain and insufficient research and development are impediments towards adoption of EVs at a fast pace in India.

He claimed that a meeting of the Fitment Committee of officers was hurriedly held on this very agenda and a large number of tax related issues are pending with this Committee much before the proposal to reduce GST on EVs was put forward in the GST Council.

First Published: Wed, July 24 2019. 18:52 IST
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