Green subsidy

Green subsidy

Public transport systems should be the launch pad for wider adoption of electric vehicles.

Government is considering a subsidy package of around Rs 9,400 crore over a five year period to encourage a switchover to electric vehicles (EVs). Those scrapping old petrol or diesel vehicles, including cab aggregators and bus fleet owners, could be offered incentives of up to Rs 2.5 lakh to go green. While it’s uncertain how much savings in fossil fuel usage will be yielded by a switchover to EVs, air quality in India’s densely packed cities would definitely see an improvement. And this is a critical factor because urban air pollution has now become a public health emergency – 14 of the world’s 15 most polluted cities are in India.

Over the last three years, government has operated a subsidy package dubbed FAME (Faster Adoption and Manufacturing of Hybrid & Electric Vehicles in India) to encourage a switchover to EVs. The subsidy package under discussion will be an extension of this. But government must build on the experience of the last three years in designing new measures. The ultimate goal of a new package should be to quickly reduce vehicular tailpipe emissions in cities, and the best way to do this is to encourage vehicle owners to switch to public transport.

In most cities, public transport is still largely powered by diesel. Targeting a subsidy package at this segment will simultaneously meet the goals of improving air quality, encouraging the manufacture of EVs and expanding their ecosystem. India’s early experiments in cities such as Bengaluru and Nagpur show that when public transport makes the first move, the sheer scale of orders allows manufacturers to lower costs. It comes with the added advantage of creating ecosystems such as charging stations, which can then also be used by private vehicles. Public transport systems can act as the launch pad for wider adoption of EVs.

International Energy Agency forecasts suggest that in the future electricity will play a significant role in providing mobility. Separately, advances in renewables technology will clean up electricity generation. Policy makers must prepare India to capitalise on the coming disruptions, by creating the right environment for a switchover to EVs. A subsidy package targeted at public transport would serve this objective powerfully. Bidding goodbye to smokespewing buses (and trucks) would be most welcome as well.