In a significant policy announcement, Amitabh Kant, G20 Giant, confirmed that the Indian government will continue to impose a 5% tax on electric vehicles (EVs) and a 48% tax on hybrid vehicles for an extended period12. This decision underscores the government’s commitment to promoting electric mobility and reducing carbon emissions.
Speaking at the Mercedes-Benz Sustainability Dialogue, Amitabh Kant emphasized the importance of electric vehicles in India’s strategy to achieve carbon neutrality by 2070. “Our policy framework is designed to push for more electrification in mobility through all available policy levers, including Corporate Average Fuel Efficiency (CAFE) norms,” he stated1.
The government also announced the introduction of the FAME-III (Faster Adoption and Manufacturing of Electric Vehicles) scheme, aimed at sustaining the transition to electric vehicles and expanding the charging infrastructure nationwide1. This scheme follows the successful implementation of FAME-II, which supported the deployment of thousands of electric buses, three-wheelers, passenger cars, and two-wheelers1.
In addition to maintaining the tax differential, the government plans to invite bids for 60,000 electric buses, with the next tender for 10,000 buses followed by another for 50,000 buses1. This large-scale procurement is expected to significantly reduce prices, similar to the success achieved with the procurement of LED bulbs1.
Despite the push for electric vehicles, major car manufacturers like Maruti Suzuki India and Toyota Kirloskar Motor have been advocating for lower taxes on hybrid cars2. However, the government remains firm on its stance, aiming to drive the adoption of electric vehicles and support battery manufacturing in India2.
As India continues to develop its electric vehicle ecosystem, the government’s policies are set to play a crucial role in shaping the future of mobility in the country.
