India ends incentives for mild hybrid cars to fight air pollution

India ends incentives for mild hybrid cars to fight air pollution

Traffic drives through smog in Delhi on Nov 7, 2016. (Reuters photo)

NEW DELHI – In a bid to curb air pollution, the Indian government has decided to withdraw incentives initially offered to mild hybrid vehicles under a scheme meant to promote electric and full hybrid models.

The Ministry of Heavy Industries and Public Enterprises announced the changes would take effect from April 1.

Under the FAME scheme, buyers are offered incentives in the form of lower vehicle costs at the time of purchase to help boost demand for hybrid cars in the country and help reduce serious air pollution.

The announcement, another in a series of steps aimed at curbing vehicular pollution in the country, may impact Suzuki Motor Corp’s Indian unit, Maruti Suzuki India Ltd, whose mild hybrid models benefited from the scheme, according to industry experts.

But Maruti Suzuki played it down. “We do not expect any significant impact due to withdrawal of the FAME incentive,” a Maruti Suzuki spokesperson said. The automaker announced in February this year that its mild hybrid models — Ciaz SHVS and Ertiga SHVS — have crossed cumulative sales of 100,000 units since their launch in the country.

“By removing the mild diesel hybrids from the FAME scheme, the entire incentive amount has now been unlocked for the benefit of the electro mobility programme,” said Anumita Roychowdhury, executive director-research and advocacy at the green lobby group Centre for Science and Environment.

“These mild diesel hybrids are a marginal improvement over conventional diesel models, but significantly more polluting and fuel-inefficient compared to electric and strong hybrid cars. These have blocked scaling up of strong hybrid and electric vehicles for the big transition towards clean and zero emissions.”

The FAME scheme has mostly boosted sales of diesel hybrid cars, according to Roychowdhury. “In the fiscal year ended March 2016, of the total amount of 700 million rupees (US$10.5 million) spent on incentives, 400 million rupees, or 57% of the total, was spent on diesel mild hybrids,” she said.

According to the government’s data, Maruti Suzuki had sold 30,157 mild hybrid cars under the FAME scheme in the fiscal year ended March 31, 2016.

“The incentive offered to Maruti Suzuki’s mild hybrid models under the FAME scheme may have helped, but was not that attractive, so I don’t think there will be any significant impact on their sales,” Abdul Majeed, partner and automotive expert at consulting firm PwC, said.

With air pollution emerging as a major concern in India, the automotive industry is under pressure to adopt new technologies to contribute to pollution-control measures.

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