In draft battery swapping policy, NITI Aayog proposes slashing GST, incentives

NEW DELHI: Government think tank NITI Aayog on Thursday proposed a draft policy to encourage rapid expansion of battery-swapping infrastructure to boost sales of electric two-wheelers and three-wheelers in the country.The draft battery-swapping policy proposes incentives for electric vehicles (EVs) with swappable batteries and a reduction in the goods and services tax on lithium-ion batteries from the existing 18%. It noted that electric vehicle supply equipments (EVSE) have a GST rate of 5% and suggested that the wide differential tax rate between lithium-ion batteries and EVSE be reduced. The think tank has kept June 5, the world environment day, as the deadline for people to send in their comments.Also Read: How battery swapping can propel India’s shift to electric vehicles“The target vehicle segments for battery swapping are e-2Ws and e-3Ws, which are heavily concentrated in urban areas. The rollout of battery swapping stations will therefore be phased. All metropolitan cities with a population greater than 4 million (as per Census 2011) will be prioritised for the development of battery swapping networks under the first phase. All major cities such as state capitals, UT headquarters and cities with populations greater than 5 lakh (as per Census 2011) will be covered under the second phase, given the importance of the 2W and 3W vehicle segments in growing cities,” said the draft policy. Battery swapping is an alternative to vehicles being sold with fixed batteries and allows people to exchange discharged batteries with charged ones. Since vehicles can be sold without a battery – the owner can subscribe to a battery service – this reduces the upfront purchase cost of the vehicle.By introducing battery swapping, the government aims to increase the demand for electric two-wheels and three-wheelers and achieve its target of 80% sales penetration for this segment of electric vehicles. Battery swapping offers three key advantages over the conventional EV charging systems – it is time, space, and cost-efficient provided each swappable battery is actively used.“We want to normalise battery swapping to such an extent that the rates come down and companies can come up with sustainable business models where batteries are offered as a service,” said a senior NITI Aayog official.The release of the draft policy coincided with Union transport minister Nitin Gadkari announcing that the government will soon release regulations for the electric vehicle manufacturers. Gadkari, who took cognisance of a series of incidents of fires in electric two-wheelers that have killed three people, also warned manufacturers of heavy penalties in case of negligence.The draft battery swapping policy proposed that demand-side incentives offered under existing or new schemes for EV purchase will be made available to EVs with swappable batteries eligible under this policy.“The size of the incentive could be determined based on the kWh rating of the battery and compatible EV. An appropriate multiplier may be applied to the subsidy allocated to Battery Providers to account for the float battery requirements for battery swapping stations in different battery swapping ecosystems. It is also proposed that a seamless mechanism for the disbursement of subsidies shall be worked out by the concerned ministry or department. To formalize and operationalize the possible subsidy scheme, an appropriate ongoing scheme may be revised, or a new scheme may be launched,” it said.

ABOUT THE AUTHOR

Sweta Goswami writes on urban development, transport, energy and social welfare in Delhi. She prefers to be called a storyteller and has given voice to several human interest stories. She is currently cutting her teeth on multimedia storytelling.
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