Tap green cess instead of taxing cars to push EVS, say auto firms

NEWDELHI: Automobile manufacturers have requested NITI Aayog to tap into the green cess and additional road taxes imposed on certain types of vehicles to incentivize the sale of electric vehicles (EVS).

The plea from the Society of Indian Automobile Manufacturers (Siam) follows a report by NITI Aayog proposing the concept of feebate prevailing in several countries in Europe and Canada to cross-subsidize electric vehicles by imposing more taxes on traditional diesel- and petrol-run vehicles.

A feebate is a market-based instrument combining fees with rebates to reward energy-efficient or environmentally friendly investments or practices and penalize inefficient and environmentally harmful ones.

Siam, in a letter to NITI Aayog, said implementing the feebate structure and any cross subsidization will make sense only when India makes advancements in establishing the ecosystem, infrastructure and technology for EVS, and cuts taxes on vehicles.

“We first need to create a solid platform of a strong and clear long-term policy framework to promote EVS, and then implement the policy in earnest till we reach a minimum level of EV infrastructure and ecosystem support. Then we need to reduce the overall taxation on vehicles to a reasonable and uniform level.”