Waive off Road Tax for Electric Vehicles, Centre urges states

Prelims level : Environmental Conservation Mains level : GS 3: Conservation, environmental pollution and degradation, environmental impact assessment
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  • The Centre urged states and Union Territories to waive off the road tax for all electric vehicles (EVs) and to give their feedback for the proposed scrapping policy for old vehicles, which the transport ministry has shared with them.


  • Currently, barely half a dozen states including Maharashtra, Karnataka, Rajasthan and Goa don’t levy any road tax while registering electric vehicles. In other states, the road tax for EVs is between 4% to 10%.
  • Absence of road tax might help in faster adoption of electric vehicles.
  • The Centre has zeroed down on these as a part of the non-fiscal incentives for promoting EVs.
  • The Centre has also suggested that the state transport corporations should go for more electric buses model from private players and link the payment to kilometres run rather than buying new buses.
  • The finance ministry officials have been directed to bring the proposal for reducing the GST on EV components across the value chain to 12% from the present rate of up to 28%
  • The government proposal also includes provide funding for setting up charging infrastructure up to 100% of the cost depending up the project.
  • The government also decided to spend about Rs 200 crore for developing indigenous technology in areas such as power electronics and battery development.

Government Initiatives:

  • The government aims to see 6 million electric and hybrid vehicles on the roads by 2020 under the National Electric Mobility Mission Plan 2020.
  • Faster Adoption and Manufacturing of Electric Vehicles in India (FAME India Scheme) for improving electric mobility in India.
  • The Union power ministry categorized charging of batteries as a service, which will help charging stations operate without licences.
  • Implementation of smart cities would also boost the growth of electric vehicles.

Concerns / Challenges

  • The Indian electric vehicle (EV) market currently has one of the lowest penetration rates in the Capital costs are high and the payoff is uncertain. The Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles (Fame) framework has been extended repeatedly and an uncertain policy environment and the lack of supporting infrastructure are major roadblocks.
  • India’s limited ability to manufacture cost effective batteries.
  • India does not have any known reserves of lithium and cobalt, which makes it dependent on imports of lithium-ion batteries from Japan and China
  • High rate of GST on EVs when government is trying to promote EVs.
  • Lack of attention on building charging infrastructure.
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