Metals News
India's Electric vehicle subsidy Reform is counterproductive and the Industry has been hit hard
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SMM News: Indian electric car manufacturers have warned that subsidies aimed at boosting the electric vehicle industry and encouraging local electric vehicle production could be counterproductive in the short term.

Because India is the most polluted country in the world and is highly dependent on imported oil, the Indian government has made the transition to electrification a priority and has set a series of ambitious goals. for example, it is proposed that all cars on sale will be electric vehicles by 2030.

At present, the market share of electric vehicles in India is less than 0.1%, and sales of electric scooters and motorcycles are also depressed. In an effort to boost the electric vehicle industry and achieve the electrification target, Indian ministers announced in July that they would cut the sales tax on electric vehicles and chargers by 5 per cent from 12 per cent and 18 per cent, respectively, and in March, the government also announced a three-year $1.5 billion subsidy scheme worth more than ten times the previous amount.

But Sohinder Gill, chief executive of India's Hero Electric, said electric vehicles had fared worse since the subsidy reforms were announced. Hero Electric is currently an independent subsidiary of Hero Motocorp, India's largest scooter and motorcycle maker.

"instead of acting as a catalyst, the new subsidy policy for the electric vehicle industry has knocked down the market in a very cruel way," Mr Gill said. "We have taken a big hit this year and the electric car industry has been deteriorating over the past few months."

India's new electric vehicle subsidy scheme requires that about half of the parts of electric vehicles must be made in India. While most electric car companies believe the rule will help in the long run, the sudden reforms have brought some unnecessary short-term pain.

Tarun Mehta, head of Hero Motocorp's electric scooter startup Ather Energy, said it had to stop sales in April and May to retrofit nearly 1000 cars with locally made wheels and other parts. "the government has launched a new subsidy scheme quite clearly, which has disrupted our models for more than two months."

At the same time, other areas of the Indian auto industry also face serious challenges. Not long ago, India was on track to become the world's third-largest car market, but car sales fell about 1/4 in May and June from a year earlier. Maruti Suzuki said its sales fell about 36 per cent in July. Carmakers have cut production and warned of massive layoffs if the situation does not improve.

Some industry insiders say the strict electric vehicle target set by the Indian government is tantamount to forcing major carmakers such as Maruti Suzuki, Mahonda and Tata Motors to invest more in new energy vehicles. But the decline in traditional car sales has raised concerns about whether India's auto industry is experiencing a cyclical slowdown or a permanent shift that some carmakers will struggle to recover from if the market turns to electric cars.

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