India has allocated Rs 10,000 crore to the Faster Adoption and Manufacturing of Electric Vehicles (FAME II) scheme.
Finance Minister Nirmala Sitharaman on Friday said the India government will also provide additional income tax deduction of 1.5 lakh on the interest paid on loans taken to purchase electric vehicles (EV), in a move to make EVs affordable to consumers.
This amounts to a benefit of around 2.5 lakh over the loan period to the taxpayers who take loans to purchase electric vehicle, said Sitharaman. The government has also moved GST council to lower the GST rate on electric vehicles from 12 percent to 5 percent.
“We aim to leapfrog and envision India as a global hub of manufacturing of electric vehicles. Inclusion of solar storage batteries and charging infrastructure in the above scheme will boost our efforts,” said Sitharaman.
Phase-II of FAME Scheme, following approval of the Cabinet with an outlay of Rs 10,000 crore for a period of 3 years, has commenced from 1 April, 2019. The main objective of the Scheme is to encourage faster adoption of electric vehicles by way of offering upfront incentive on purchase of electric vehicles and also by establishing the necessary charging infrastructure for electric vehicles.
Only advanced battery and registered e-vehicles will be incentivized under the Scheme with greater emphasis on providing affordable and environment friendly public transportation options for the common man, said Sitharaman. FAME II aims to encourage faster adoption of electric vehicles by right incentives and charging infrastructure.
With an intention to incentivise e-mobility, customs duty is being exempted on certain parts of electric vehicles. Customs duty is also being exempted on capital goods required for manufacture of specified electronic goods.
The government also announced a proposal to increase the special additional excise duty and road and infrastructure cess each by one rupee a litre on petrol and diesel.
“Crude prices have softened from their highs. This gives me a room to review excise duty and cess on petrol and diesel. I propose to increase special additional excise duty and road and infrastructure cess each by one rupee a litre on petrol and diesel,” said Sitharaman.