No need for further subsidy on EVs: Union Minister Nitin Gadkari

The Union Minister of Road and Transport, Nitin Gadkari, on Thursday said that there is no need for further subsidies for electric vehicle (EV) adoption in the country. He was speaking at the BloombergNEF Summit in New Delhi.

His statement comes a day after the minister of heavy industries, H D Kumarswamy, announced that the government will be rolling out FAME-III (faster adoption for manufacturing of hybrids and electric vehicles) in the next one-two months.

According to Gadkari, the subsidy was introduced when the cost of lithium-ion battery was very high.

“Once upon a time, the lithium-ion batteries cost for $150 per kilowatt per hour. Now it is something around $107-$108 kilowatt per hour. And now five companies are starting to manufacture lithium-ion batteries. I think that within two years, the cost will come up to $90 kilowatt per hour and when it will come to $90, the cost of the diesel, petrol vehicle, and electric vehicle will be the same. But the fuel cost as compared with the electric and fossil fuel, it is to be 10 times less than the fossil fuel,” says Gadkari.  

“Today the demand has increased, volume has increased, and cost has reduced... My personal feeling is, now we don’t need too much subsidy. Already, the GST on petrol and diesel vehicles is 48%, and 5% on electric vehicles,” says Gadkari.

Gadkari’s statement is likely to dampen the spirit of EV manufacturers in the country who are banking on subsidies to drive EV adoption.

The FAME-I scheme was introduced in 2015 until 2019 with a total outlay of Rs 895 crore. The scheme was extended as FAME-II till March 31, 2024 with an outlay of Rs 10,000 crore.

Notably, the government, last month, extended the EMPS (Electric Mobility Promotion Scheme 2024) by two months till September 20, 2024, with an enhancement of outlay to Rs 778 crore. As the FAME-II subsidy ended in March 31, 2024, the government introduced the EMPS Scheme for four months from April 1, 2024 to July 31, 2024, with an outlay of Rs 500 crore.