New cars may face Rs 12000 levy in govt bid to push e-vehicles

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New Delhi, Dec 19: Using the “polluter pays” principle, the government has drafted a plan to impose a fee of Rs 12,000 on purchase of new petrol and diesel cars to raise money for incentivising electric vehicles (EVs) and battery manufacturing, under a new policy that is nearing finalisation.
A note prepared by NITI Aayog after a meeting of top secretaries has proposed incentives of up to Rs 25,000-50,000 in the first year for those buying electric two-wheelers, three-wheelers and cars, top government officials said. To ensure that the gains aren’t pocketed by automakers, officials have proposed a direct benefit transfer to EV buyers while offering km-based incentives for state agencies operating e-buses. The revamped policy, which will require ministerial clearance, has been drafted after Prime Minister Narendra Modi junked an earlier draft and asked bureaucrats to ensure that batteries were incentivised to lower costs instead of offering sops to automakers.
Sources said the incentives will come along with improved fuel efficiency and emission norms and are needed for a rapid ramp-up of vehicles using clean technology. The “feebate” is expected to help the government garner close to Rs 7,500 crore in the first year and supplement its budgetary outlay of a mere Rs 732 crore, which it reckons is insufficient to fund the scale of expansion of EVs that is planned. As the surcharge on “polluting cars” rises to Rs 70,000 in the fourth year, the government hopes to mop up over Rs 43,000 crore through the new levy. The surcharge burden will not be limited to fossil fuel cars. Petrol/diesel two-wheelers, three wheelers and commercial vehicles too will have attract a surcharge of Rs 500-25,000 in the first year, which will go up to Rs 4,500 to Rs 90,000 in the fourth year.