Will the “Polluter to pay more to incentivise electric vehicles” policy work? 

Environment pollution is an incurable disease. It can only be prevented! – Barry Commoner 

TimesofIndia published “The Government has drafted a plan to impose a fee of Rs.12000 on the purchase of new petrol and diesel cars to raise money for incentivizing electric vehicles ( EVs ) and battery manufacturing, under the new policy that is nearing finalization. “

This means using “Polluter pay” principle, every end user may have to pay Rs. 12000/- ( approx. US$170 ) extra while purchasing a new petrol/diesel cars and this money will be used as incentives for electric vehicles in various ways.

The “polluter pays” principle is the commonly accepted notion that those who produce pollution should bear the costs of managing it to prevent damage to human health or the environment. For instance, a factory that produces toxic byproducts is usually held responsible for their safe disposal. In this context, who ever buy a fuel based vehicle should pay for the pollution the vehicle is going to produce.

As per one website iamrenew.com, this policy been portrayed as “The extra tax on vehicles seems to be just another way to show action to cover up for inability to do anything significant actually” which is totally an illogical statement. Being in EV industry over a decade I understand that why an end user would buy an electric vehicle with an eco-friendly consciousness? The end user should be shown some advantage in terms of price or convenience. This step would give an advantage of the price if the funds collected been properly used.

The advantages and disadvantages of this policy as per my thoughts as follows


  • The government will have additional revenue which can be diverted as incentives to EV market and making the end user who buys EVs get benefitted directly or indirectly. Till now the incentives been given to EVs have been from the government’s treasury but this move will help government managing the incentives better and explore more ways of incentives. Some kind of incentives can be as follows
    1. For direct end user while travelling in public electric bus / electric cars by limiting the ticket pricing
    2. For the direct buyer of an electric car with discounts due to their initiative to buy an environmentally friendly vehicle
    3. For the EV manufacturers in terms of reducing the import customs charges, GST  for some specific products and technologies where India still in the development stage.
    4. For building the infrastructure of EVs like charging stations, battery swap stations
    5. Direct incentives to the component manufacturers who cater their products to EV companies
    6. Research and development of critical components of electric vehicles – electric battery & drivetrain
    7. Provide wavier for the registration fee and road tax for EVs.
  • This will be an encouragement to the end user who is choosing to buy EV due to his/her concern to the environmentelectric vehicles
  • The additional price on the fuel vehicles will directly add the price with a clear reason that the fuel cars are not eco-friendly, the end user may also be motivated to buy an electric car or end up in buying a fuel car by paying the additional fee. Whatever may be the case, EV industry would be benefitted.
  • Auto companies will work towards the electric vehicle development in-house to get the advantage of this and capturing the market


  1. Directly makes the fuel cars more costly and as EVs are not high speed and limited by the distance per charge, the end user may be dissatisfied with this step.
  2. The end user may not find any logic behind adding the additional fee for promoting EVs and may protest against this new rule
  3. Though Automotive companies may plan their strategic roadmap with EVs, current sales will be direct have a negative impact due to this and may protest against this government new plan
  4. Also, there is a risk of getting the collected money to wrong hands in the political environment and government should be very careful to safeguard and use this productively.

Whatever may be the advantages or disadvantages, if this new policy been strictly implemented there will be a shoot up in EV sales and also cash flow for the government for incentivizing the EV market. Hence India should be ready for this spike in the number of EVs on the roads with various infrastructure requirements like Charging stations in offices/residential/ commercial areas, service stations, power generation.

Personally, I feel this step as an EV business-friendly move and have more advantageous than the disadvantages and a positive gesture to Indian companies who are investing in EV business.

This article is not to promote any brands but to share my thoughts and especially to promote electric vehicles which I still believe that the future of the automotive industry will be electric. 

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Note: The article is totally my own thoughts and not necessarily anyone needs to agree with my thoughts and ideas.