Budget 2012 brings in a twist for the Electric car market in India

The Union Budget of 2012-2013 has made the way very narrow and rigid for the growth of electric vehicles and hybrids in the country. The Budget made some concessions but has imposed additional taxes as well, which has only increased the overall tax on the sales of an electric of hybrid car which will only be passed over to the consumers by the car manufacturers. Although lithium-ion battery packs which are used in the electric and hybrid cars have been given a full exemption on the basic customs duty, but excise duty will still be levied. The good part is that the excise duty has been reduced to 6 per cent compared to 10 per cent o]]f the previous taxation slab. Other than that, duty on some other specified parts of these vehicles have also been reduced to 6 per cent from the previous 10 per cent tax slab. But a 5 per cent to 6 per cent increase in the basic excise duty on cars will raise the car prices by 1 per cent. The CVD (Countervailing Duty) has also been increased up to 6 per cent fromthe previous 5 per cent which will make the batteries costlier.

Budget 2012 brings in a twist for the Electric car market in India

The Founder, chief technology and strategy, Mahindra Reva, Chetan Maini said the other day that the 2012-2013 budget is more disappointing rather than encouraging for the EV (Electric Vehicle) industry. Whatever benefits have been given is in peanuts, the different duties/cess has also raised the cost of EV from 1 per cent to 1.5 per cent. Overall, this budget didn’t support or encourage the EV industry at all.

However, the Indian customer will still find the EVs cheap compared to the petrol or diesel vehicle. In a recent nationwide survey done by Absolutdata, an analytics firm shows that Indian automobile customers are very keen on buying an EV or anything which will save money spent on fuel.  78 per cent of the surveyed admitted to the fuel efficiency and space being the biggest factor on reaching a decision to buy a car. Half of the surveyed were looking for a diesel variant to go for because it’s more fuel efficient compared to petrol. Almost all of gladly admitted to pay even a premium to get an EV.

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