E - Vehicles get assistance by Delhi government

 The Delhi government has announced an incentive on the purchase of electric vehicles, upto Rs. 30,000 on two wheelers and Rs. 150,000 on four wheelers. The incentive will come in the form of a subsidy which will allow producers to produce at lower costs and therefore are likely to reduce prices for consumers. This will funded by the pollution cess and road tax on fuels.

India has very few electric vehicles due to high tariffs on importing electric vehicles and also lack of domestic production. Although Two wheelers have become famous in the country due to previous central government initiatives such as FAME, these initiatives have not been  very effective. 

E- Vehicles are beneficial for the environment since they reduce the greenhouse emissions and are also considered to be on average low cost. One of the reasons for a lot of companies to not produce in India was the high cost and less availability of spare parts. This assistance gives the producer an incentive to manufacture in India. Domestic production will lead to the price E- Vehicles reducing since the domestic producers can avoid the high tariffs which are levied by the government on the imports of E-vehicles.

The incentive for producers to produce E-vehicles should increase the supply of E-Vehicles, which will create jobs in the economy. Moreover, this policy comes at a time when the prices of fuel is on the rise in the country and the people will be more reluctant to shift to a cheaper substitute. Delhi is very well known for its pollution and this move seems viable to reduce pollution in the city. E-Vehicles have been in trend throughout the world with big names such as Tesla leading the way, however, India has not been able to benefit from these vehicles. 

Overall, this assistance should reduce carbon emissions and increase employment, however, this move can be criticised for the reason that the already existing E-vehicle producers have faced problems such as lack of Lithium battery and other raw materials which are needed to manufacture these vehicles. The subsidy will reduce the cost, but producers may still find it hard to procure the raw materials, which leads to supply constraints. The government should also focus on being able to create a suitable environment for the producers by improving supply chains rather than only providing them with monetary incentives. 

image source- cyberspidey.com