New Delhi: India may spend ₹ 1,400 crore over the next two years on incentives and subsidies for makers and buyers of electric vehicles as part of an effort to have at least six million electric vehicles on the country’s roads by 2020.

Mint has reviewed the details of the scheme that involve spending a total of ₹ 24,000 crore till 2020 towards achieving this objective. Of this, ₹ 14,000 crore will come from the government. The auto industry is expected to spend the rest in research and development of electric vehicles.

The scheme, details of which may be part of the Union Budget this year, is also expected to improve India’s standing in global climate change discussions. The details reviewed by Mint suggest that the finance ministry has asked the department of heavy industries to devise ways to track incentives and subsidies online.

“For a country like India which depends on imported oil, electric vehicles make eminent sense from the energy security point of view. It also has huge climate change benefits if we dovetail it with renewable energy. Electric vehicles are the future and government should invest in this technology for energy security and climate benefits," said Chandra Bhushan, deputy director general, Centre for Science and Environment.

The scheme will be funded by tapping allocations to other existing schemes, such as the National Urban Renewal Mission (NURM) under the ministry of urban development and the climate change fund of the ministry of environment. In 2013, then prime minister Manmohan Singh unveiled the ambitious National Mission Plan for Electric and Hybrid vehicles.

Two years on, there isn’t much to show for it. Chetan Maini, founder and chief executive, Mahindra Reva Electric Vehicles Pvt. Ltd, said the national mission has been a “delayed process".

“I hope it gets implemented sooner," Maini said in a phone interview. “A strong policy in China resulted in electric vehicle sales going up 500% and crossing the number of such vehicles sold in the US." The same thing happened in Norway and the UK, he added.

Maini described the government’s plan as “holistic".

“If the government announces it sooner, it will send out a strong signal and bring in investments on supplier side and energy side."

The government expects the electric vehicles to help the country save 2.2 million tonnes (mt) to 2.5 mt of liquid fuel, valued around ₹ 14,000-15,000 crore. It also sees them reducing the country’s carbon dioxide emissions by up to 1.5%. In the next two years, the government hopes the policy will help facilitate sales of at least 800,000 electric vehicles, led by the sale of two- and three-wheelers.

India is the third most polluting country in the world, after the US and China, which have signed a major bilateral climate deal in November, wherein the US will reduce its emissions by 26-28% below its 2005 level by 2025 and China will reach the peak of its harmful carbon dioxide emissions around 2030.

India, too, is gearing up to meet the challenge. In November, the country’s National Green Tribunal announced that it would ban vehicles older than 15 years from New Delhi’s roads. This has been subsequently challenged by the centre. “The centre is likely to allocate ₹ 800 crore to the auto industry (for electric vehicles) during the upcoming Union budget, which will be utilized for subsidies, infrastructure creation and R&D (research and development) activities over the next two years. Besides, the government will also create a fund of at least ₹ 600 crore from the auto cess that it gets for every vehicle sold in the country," said a senior government official who spoke on condition of anonymity.

The cess refers to the one-eighth of a percent of a car’s cost that goes to the consolidated fund of India. “An announcement to this effect is likely to happen during the budget. We are in the process of devising a mechanism to track incentives and subsidies electronically. The finance ministry is quite keen on the project," said a second government official familiar with the development, who also didn’t wish to be identified.

A DHI spokesperson didn’t respond to an email seeking comment. A finance ministry spokesperson said in an e-mail that “any story relating to Budgetary proposals at this stage is speculative and therefore, can neither be confirmed nor denied at this point of time."

A consultant who asked not to be identified said the policy should focus on developing right kind of infrastructure and battery technology.

Naveen Munjal, managing director, Hero Electric, said the government’s target of putting 6 million electric vehicles on the road by 2020 is very aggressive.

“There is no infrastructure to support that kind of figure. Therefore, funds have to come immediately. This plan was announced in January 2013 and things have not really moved quickly," Munjal said.

He added that Hero Electric’s future depends on the policy.

“Our survival is based on this policy. If it does not happen now, India will miss the bus," Munjal said.

Mayank Aggarwal in Delhi contributed to this story.

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