To promote wide-spread electric vehicles (EVs) adoption in India, the government think tank NITI Aayog has suggested a tweak in tax policy to benefit ride-hailing firms such as Ola and Uber.
NITI Aayog CEO Amitabh Kant in a letter to revenue secretary Ajay Bhushan Pandey has written to give accelerated depreciation benefit for ride-hailing firms shifting 20 percent of their fleet to EVs.
Accelerated depreciation at 80 per cent may be provided in respect of EVs purchased in the next four financial years beginning 1 April, he said.
Accelerated depreciation is defined as a method wherein larger portions of the asset are written off in earlier years lesser in the later years of useful life. It basically allocates the asset’s cost of benefits.
Such benefits can be passed on to cab aggregators and delivery network of e-commerce firms, a Mint report quoted Kant as saying in January letter.
Accelerated depreciation benefit is effective because it offers a good level of financial support at a low level of risk for investors and operators. This structure is appropriate for the early stage of electric mobility promotion since the technology is yet to develop fully, and offers more certainty, Kant added.
The recommendation is yet to be considered by the govt. If this goes through, ride-hailing firms Ola and Uber will be eligible for the benefit for the next four fiscal years.
Besides, it will lead to an increase in EVs adoption and encourage manufacturing.
Last month, the govt had approved Rs 10K crore for promoting an EV ecosystem in the second phase of FAME. The govt aims to achieve high penetration of electric vehicles (EV) by 2030 on the back of the success of its schemes like FAME II.
As per NITI Aayog last report, the penetration of EV vehicles could reach around 80 per cent in case of two-wheelers and 30 per cent for private cars.
It also suggested a phased manufacturing plan to promote EVs. The govt has also drafted a plan to levy a fee on new petrol and diesel cars.
Meanwhile, Ola had in March raised about $300 million from Hyundai and also created a separate entity Ola Electric Mobility. It already had received Rs 400 crore from Tiger Global and Matrix.
The firm plans to deploy the amount to develop fleet and mobility solutions, electric vehicles and infrastructure specific to the Indian market with the help of investors.