Finance Ministry Approves Subsidy Plan for EV, Mobile Batteries

The finance ministry has announced that it has sanctioned a Niti Aayog plan to subsidize manufacturing of batteries for electric vehicles and mobile phones. The proposal involving annual subsidy of Rs 700 crore will now go to the cabinet for its permission.

The expenditure finance committee (EFC), under the ministry, has given its go ahead to the authorized think tank’s proposal for generating 50 GWh (Gigawatt hours) battery capacity in the country.

“The proposal will now be sent to the cabinet for approval, following which the Aayog will invite bids in December,” the official said. The plan is to award contracts soon after that so that battery manufacturing plants are up and running by 2022, the person said. Conservative estimates show that India would need 600 GWh of battery for 10 years starting 2020.

Once battery manufacturing picks up pace in the country, the government believes it will be possible to bring down the cost of these batteries to $76, or about Rs 5,450, per kilowatt hour (kWh) from $276, or about Rs 19,800, per kWh, the official said. This is expected to bring down the cost of electric vehicles to make it almost on a par with combustion engine cars in the next 3-4 years.

Currently, batteries account for an average of 50% of the cost of electric vehicles in the country. The government plans to link subsidy to the capacity creation committed and the level of indigenization.