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India Approves Incentives for Electric Vehicles

India’s federal government approved incentives totaling 950 million rupees ($21 million) for makers of electric vehicles.

The subsidy, applicable for hybrid and electric vehicles, will be available until March 2012, Sohail Akhtar, a director in the Ministry of New & Renewable Energy, said by telephone today. The government also plans to fund research and development of electric vehicles.

The incentive “would allow us to invest in technology, design, research and development and supply chain development,” said K. B. Srinivasan, vice president of research at BSA Motors division of Tube Investments of India Ltd.

The government approved an incentive of as much as 400,000 rupees for electric minibuses and 100,000 rupees for passenger cars. For two-wheelers, the incentive would be 4,000 or 5,000 rupees, depending on the vehicle’s speed.

For three-wheeled vehicles, the incentive is as much as 60,000 rupees, according to details of the Alternate Fuels for Surface Transportation Program published on the website of the Ministry of New and Renewable Energy.

To claim the incentive, the manufacturers will have to certify that at least 30 percent of components in the vehicles were made locally, the guidelines say.

“This will double the market for electric vehicles by March 2012, when the incentives will have had full impact,” Sohinder Singh Gill, director at the Society of Manufacturers of Electric Vehicles and chief executive officer at Hero Electric, said by telephone.

About 85,000 electric vehicles were sold in the year ending March 2010, about the same as the year before, he said. The manufacturers are likely to pass on to consumers some part of the incentive to boost volumes, he said.

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