The Union Minister of Road Transport and Highways, Nitin Gadkari, has recently given a bold statement. He has stated that, according to him, subsidies on electric vehicles are now not necessary. Gadkari also highlighted that EVs are already being charged with significantly less GST when compared to ICE vehicles. So he believes that asking for more subsidies on electric vehicles is too much.
EVs now don’t need subsidies – Nitin Gadkari
While speaking at the Green Bharat Summit, Nitin Gadkari, the Minister of Road Transport and Highways, stated, “My personal belief is now we don’t need too much subsidies. The GST (goods and services tax) on petrol and diesel vehicles is 48 percent.”
He added, “The GST on an electric vehicle is only 5 percent. Still, after getting 5 percent GST, if someone is expecting subsidy from the government, my honest opinion is now we don’t need subsidies.”
Elaborating on his point, Gadkari stated that the already low 5 percent GST on EVs is the “bare minimum.” He added that this benefit is already substantial for the buyers. So expecting additional subsidies over reduced GST seems a little too excessive.
The MoRTH minister also highlighted that the EV market has matured a lot in the last few years. For this reason as well, he believes that it now does not require incentives from the government to sell more vehicles in the country.
Gadkari’s vision for Indian automotive industry
Just a few days ago, and at this recent event as well, Gadkari stated that within the next five years the Indian automotive market will become the largest in the world. He added that logistics costs will be reduced and the road networks will increase along with the quality of roads.
He stated, “Today, the size of the industry has grown to Rs 22 lakh crore and we have just surpassed Japan as the third largest auto industry in the world. USA tops the list with the size of the industry estimated at Rs 78 lakh crore, followed by China at Rs 47 lakh crore. I am confident that in 5 years, we will be number one in the world and e-vehicles will be the primary factor driving the growth of the industry.”
How would the absence of subsidies affect prices of EVs?
Earlier in March of this year, the government of India stopped offering the FAME II subsidy for electric vehicles, including two-wheelers, three-wheelers, and four-wheelers, along with others. Following this, in October, the Indian government started a new scheme called the PM E-Drive Scheme.
Under this scheme, Rs 10,900 crore has been allotted to incentivise the sales of electric two-wheelers, three-wheelers, EV buses, EV trucks, and EV ambulances. It has to be noted that privately owned electric cars are not being given subsidies under the new PM E-Drive Scheme.
This means that the government of India has already started taking away the subsidies for electric vehicles, and by March of 2026, this new scheme will end as well. So, at the end, electric vehicles will have to compete with ICE vehicles without subsidies.
Presently, only a few states are offering some subsidies to electric vehicles. However, it has to be noted that these subsidies are being given as waivers on RTO fees and registration taxes. States like Delhi and Telangana are also offering these road tax waivers. However, these are also valid only for a few months, and there is uncertainty whether they will continue or not.
Overall, if the government of India does decide to completely stop offering the subsidies on electric vehicles. The prices will surely go up. However, as EVs are becoming more mainstream, automakers are finding ways to make them cheaper. So in the long run the pricing of EVs will come very close to ICE vehicles.
Should EVs be given subsidies?
Although it may seem slightly blunt, we believe that EVs do not need any more subsidies. We say this because they already enjoy the significantly low GST of 5 percent. As mentioned by Gadkari, the ICE cars, on the other hand, are subjected to 48 percent GST. So this difference in GST is already very huge, and giving EVs more incentives on top of this seems unfair.
Also, over the last few years, the EV industry has developed a lot. A few years ago, subsidies on EVs were justified as they were new to the market and buyers were not adopting them. However, the technology used in EV manufacturing is bringing them very close to ICE vehicles, so at this point, they can compete with them on merit.
