SIAM President Shailesh Chandra’s remarks align with expectations that the government will discontinue demand incentives for buying electric two-wheelers and three-wheelers starting from the financial year 2027.
Shailesh Chandra, the new president of the Society of Indian Automobile Manufacturers, suggests that government subsidies for electric vehicle buyers should be phased out when penetration in a specific vehicle category reaches 20%. Chandra believes these subsidies should remain until a substantial number of consumers have adopted the technology, enhancing its acceptance through positive word-of-mouth. He anticipates that as production scales up and costs decrease, subsidies will no longer be necessary.
Chandra, also the Managing Director of Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility, observed that costs are declining due to cheaper cell technology, increased local production, and higher production volumes. This has brought the price of electric vehicles closer to that of internal combustion engine vehicles.
He highlighted that once 20% of market penetration is achieved, it would be appropriate to begin reducing subsidies. His comments align with government plans to gradually reduce demand incentives for purchasing electric two-wheelers and three-wheelers starting in the 2027 fiscal year under the PM E-Drive scheme, which continues the subsidy levels of the previous EMPS. However, the subsidy amount per vehicle will be halved in the second year for these segments.
Chandra mentioned that this approach is based on observations from other countries, such as China, where successful electric vehicle penetration has led to a reduction in subsidies. This is typically when one out of five people opts for an electric vehicle, promoting further adoption through their influence.
He also noted the exclusion of electric cars from the PM E-Drive scheme, attributing it to insufficient charging infrastructure. However, he is optimistic that the scheme’s focus on developing infrastructure for passenger vehicles will foster greater adoption of electric vehicles in the future.
