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Indian government clears Rs 230 billion electric vehicles plan

According to reports, the government on Wednesday approved a Rs23,000 crore plan to promote the production of electric (EV) and hybrid vehicles over the next eight years, and set a sales target of 60 lakh units by 2020.

The schemes are an extension of the National Electric Vehicle Mission Policy announced by former finance minister Pranab Mukherjee during the 2011 Budget.

For automakers, the question remains whether they can make cars cheap enough.

“The question is the viability … The cost of the car and how much the consumer can pay, there is a gap today,” said Pawan Goenka, chairman of Mahindra Reva, India’s only electric-focused carmaker.

Mahindra & Mahindra-owned electric car manufacturer Reva recently inaugurated itsfacility near Bangalore and aims to sell 30,000 units of EVs by 2016.

Sales of electric vehicles were severely impacted post the expiry of Ministry of New & Renewable Energy (MNRE) scheme in March. According to industry officials, three companies registered under MNRE have already shut their shops. Not only this, a lot of dealers quit their businesses on account of subdued sales.

According to the industry, the sales of electric vehicles will grow 100% with the implementation of the new scheme.

“We are very excited with today’s announcement. We are optimistic that the sales of EVs will grow 100% post the implementation,” said S Gill, CEO Hero Eco, and director of the Society of Manufacturers of Electric Vehicles (SMEV).

Gill further added that the government has also promised to restart the previous MNRE scheme till the new policy gets executed. “This brings great relief to the industry, which was already under stress,” said Gill.

Though there is no clarity on the exact date of implementation, as per the industry players, the new scheme is expected to be implemented within the next 3-4 months.

India’s target to produce 6 million green vehicles by 2020, of which 4-5 million are expected to be two-wheelers, comes as China aims to have 500,000 electric and hybrid cars on its roads by 2015.

S. Sundareshan, secretary of the ministry of heavy industries, said New Delhi would provide around Rs13,000-14,000 crore of the total investment in the plan, with companies providing the remainder.

“We will put in some specific schemes with regard to subsidy element, R&D, demand creation and infrastructure,” Sundareshan said.

“More individual schemes will come out at a later date.”

“We are happy that the government has factored in almost everything what was discussed,” said Gill. The policy includes aspects like incentives to customers, charging infrastructure, research & development funding to promote indigenisation, creation of EV zones, etc.

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