Indian EV Companies Ask Federal Government For Sales Incentives Program

Indian EV Companies Ask Federal Government For Sales Incentives Program

By Greg Johnson May 4, 2009

Last year, sales of electric vehicles (led by battery-powered scooters) were on a roll in India. But sales stalled as the global economy went into recession and lower gasoline prices further dulled the allure of  greener machines.

Mint, an Indian newspaper, is now reporting that the country's vehicle manufacturers have asked the government to offer subsidies of up to 25% to consumers who buy EVs.

"This (industry) has to be seeded by the government by incentivizing people to buy our products," Sohinder Gill, chief executive of Hero Electric, the Hero Group arm that sells electric two-wheelers, told the newspaper.

Gill told the newspaper that India should follow the lead of the U.S., which is offering up to $7,500 in rebates for buyers of electric cars. The United Kingdom last month joined Germany and other countries that also have offered incentives to help counter the relative premium consumers must pay for a green vehicle.

There are no solid EV sales figures for the Indian market, but the Society of Manufacturers of Electric Vehicles, which was incorporated last September, estimates that about 100,000 electric scooters were sold in the country last year. Battery-powered scooters last year accounted for about 10 percent of the total market, according to Mint.

Global Insight (subscription required) notes that sales of electric vehicles "have stagnated during recent months in India after healthy growth last year." Not surprisingly, the economics and politics forecasting company tied the Indian sales drop to the same market forces that are frustrating green vehicle manufacturers in this country - fluctuating gasoline prices and the lack of a convenient electric vehicle charging infrastructure.

The gasoline price swings could be addressed (here or in India) by a federal fuel policy that includes a price floor below which gasoline prices cannot drop or a variable tax credit that adjusts upward as gasoline prices fall. Those kinds of policies would keep new green technologies competitive.

Mint's news story suggests that "help could be at hand as an anonymous official at the Ministry of New and Renewable Energy said that the industry will be helped to set up manufacturing facilities, and that a policy will be announced after the forthcoming elections."

Greg Johnson, Contributor

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