India may ditch hybrids in favour of electric cars

Niti recommends capping the sale of fuel-run vehicles

New Delhi, May 7: The government think-tank Niti Aayog has recommended lowering taxes and interest rates for loans on electric vehicles, while capping sales of conventional cars, signalling a dramatic shift in policy in the country.

A draft of the 90-page blueprint, seen by Reuters, also suggests the government opens a battery plant by the end of 2018 and uses tax revenues from the sale of petrol and diesel vehicles to set up charging stations for electric vehicles.

The recommendations in the draft report by Niti Aayog are aimed at electrifying all vehicles in the country by 2032 and will likely shape a new mobility policy, said the government and industry sources.

The report focuses solely on electric vehicles which marks a shift away from the current policy that incentivises both hybrid vehicles — which combine fossil fuel and electric power — and electric cars, and is worrying some automakers.

“India’s potential to create a new mobility paradigm that is shared, electric and connected could have a significant impact domestically and globally,” said a draft version of the report, titled Transformative Mobility Solutions for India, which will be made public this week.

India’s plan to leapfrog hybrid tech comes after China announced aggressive measures last year to push sales of plug-in vehicles including subsidies, research funding and rules designed to discourage fossil-fuel cars in big cities.

It would also mark a radical response by India as it looks to cut its oil import bill to half by 2030 and reduce emissions as part of its commitment to the Paris climate treaty.

Officials acknowledge the blueprint faces challenges. High battery costs would push up car prices and a lack of charging stations and other infrastructure means car makers, who have been consulted on the proposals ahead of publication, would hesitate to make the necessary investment.

“If we accelerate electric vehicle growth it will be a disruption for the auto sector and would require investment, but if we’re not able to adapt quickly we risk being net importers of batteries,” said a government source involved in the plans.

“There has been resistance from car makers.”

Maruti Suzuki has invested in so-called mild-hybrid technology, which makes less use of electric power than full hybrids, while Toyota Motor Corp sells its luxury hybrid Camry sedan in the country.

M&M is the only manufacturer of electric vehicles in India.

India, in 2015, launched a scheme called Faster Adoption and Manufacturing of Hybrid and Electric Vehicles under which it offered incentives for clean fuel technology cars to boost their sales to up to 7 million vehicles by 2020.

Despite incentives as high as `1,40,000 on some cars the scheme has made little progress, with the sales of electric and hybrid cars making up only a fraction of the 3 million passenger vehicles sold in 2016. The scheme, which expired on March 31, has now been extended by six months while future policy is worked out, two government officials said. Lack of clarity on policy risks delaying investment in the auto sector, one official added. The report, coproduced with a US consultancy, outlines a 15year plan, broken into three phases starting in 2017.