Hi Friends,

Even as I launch this today ( my 80th Birthday ), I realize that there is yet so much to say and do. There is just no time to look back, no time to wonder,"Will anyone read these pages?"

With regards,
Hemen Parekh
27 June 2013

Now as I approach my 90th birthday ( 27 June 2023 ) , I invite you to visit my Digital Avatar ( www.hemenparekh.ai ) – and continue chatting with me , even when I am no more here physically

Monday 23 October 2017

FW: ELECTRIC VEHICLE POLICY : THIS WILL WORK !




Sent: 23 October 2017 17:17


To: Hemen Parekh


Subject: Re: ELECTRIC VEHICLE POLICY : THIS WILL WORK !


Thank you for writing to us sharing your valuable ideas


On 10/11/17 04:35 PM, Hemen Parekh <hcp@recruitguru.com> wrote:
To Buy  or  not  to  Buy  ?
================================================
That is the question that EESL should be asking  !
Economic Times ( 07 Oct ) carries following news report :
“  EESL  Plans to let Private Sector into EV leasing 
Energy Efficiency Services (EESL) plans to open up  vehicle leasing programmes  to private institutions in its push towards vehicular electrification. 
The firm, which recently awarded a tender for procuring 10,000 electric vehicles (EVs), said the contract was the first of many as there are over half a million vehicles with the Centre waiting to be replaced with those equipped with electric power trains.
There are also opportunities in the corporate market for leasing EVs.

EESL managing director Saurabh Kumar told ET, “ We may open up to private institutions... They can set up charging points for vehicles leased in the company name and in that way avoid regulatory hurdles over the sale of electricity.” 

At present, the Electricity Act prohibits the sale of electricity by anyone except the distribution licensee.
If a private firm sets up charging points for vehicles leased under the company name for use by employees, the regulatory hurdle can be eased and at the same time, environmental concerns will stand addressed.

“We have specified a minimum range of 130 km for the EVs we are procuring in the tender. Most vehicles used in intra-city operations cover a daily distance of 80 km.
Corporates can have charging stations in offices for powering leased vehicles when idle. Even after taking the tariff for electricity into account, the operating cost of an EV is one-sixth of that of a petrol one,” Kumar added

Bulk acquisition of EVs by EESL, Kumar said, would help bring down purchase price and spur demand. “Leasing will work in the commercial space. And also help bring down procurement costs,” said VG Ramakrishnan, managing partner, Avanteum Partners LLP.

Overall, EESL plans to acquire 10000 electric vehicles for replacing the fleet in the power, coal, new and renewable energy ministries by June 2018. 

There is no doubt , as compared to buying / owning EVs , private commercial companies would benefit by leasing out the cars from EESL
Companies ( leasing the electric cars from EESL ) , can write off the lease-rent as tax-deductible expense
But  EESL –  the car-owning company ( the company leasing out those cars ) , can only claim, 10 % depreciation !
And just sell off those “ owned “ cars as SCRAP , after 5 years !
Therefore , it makes sense , even for EESL itself , to float a tender for “ leasing “ rather than for “ buying “ those 10,000 cars
Apart from this , there are other reasons why I advocated that EESL itself should float a tender for “ Leasing “ instead of “ Buying “ those 10,000 EVs
Read my blogs :
=======================================================
=======================================================
Waiting  to be proved wrong  !   [  30  Sept  2017  ]
PIYUSH PLAN ?  [  27  March  2016  ]
=======================================================
And should EESLlease “ these cars from TATA / M&M , I don’t think , there is any law which would prevent EESL to, in turn , sub-lease these very cars to government departments or to private commercial firms !
So , this leasing ( instead of buying ) , would save the government exchequer , a huge sum ( Rs 1100 crore ) by way of initial investment
And , as explained in my above-mentioned blog :
EESL could lease these ( 10,000 ) cars ( from TATA / M&M ) at Rs 15 per km
EESL would sub-lease these to Govt Departments at Rs 27 per km
Hence , per km , EESL would make a gross margin of Rs 12 ( Rs 27 – Rs 15 )
For 20,000 km / year / car , that would amount to gross margin of  Rs 2.4 lakh
For 10,000 cars , that would add up to , Rs 240 Crore  !
And , that Rs 15 / km ( Rs 3 lakh/car/year ) that EESL would pay to TATA / M&M by way of “ lease rent “ , would be treated as “ tax deductible expense “ !
A neat sum of Rs 300 Crores  !
IT MAY BE POSSIBLE TO STILL AMEND THE ORDER FOR THE BALANCE 9,500 CARS 
Outright Selling “ of cars by car-manufacturers , translates into “ Car Ownership “ ( for who-so-ever is the buyer , even a private citizen )
This is something that Shri Nitin Gadkari wants to get away from , in order to promote the concept of “ Car as a Transporting Service “ , through more public transport
No doubt , Electric Vehicles will reduce air pollution
But “ Electric Public Transport “ will not only reduce air pollution , it will also dramatically reduce “ Traffic  Congestion
Question is:
How can government discourage “ Private Ownership “ of vehicles ( even if electric ) and encourage “ Electric public Transport “ ?
Here are some suggestions ( - some covered by my earlier blogs ) :
======================================================
#   Incentives to Electric Vehicle Manufacturers  :
     ( to become global exporters of EV , as suggested by Shri Amitabh Kant , CEO
       – NITI Aayog )
     
Reduce GST from 12 % to 5 %
Reduce Customs Duty on Lithium-ion Batteries from 26.5 % to 12 %
Make “ Lease Revenue “ exempt  from corporate income tax ( = cheap self finance for working capital needs of the manufacturers  ? )
Make “ Scrap Value “ ( upon expiry of lease term of leased cars ) , tax exempt
Make available for FREE , ISRO technology for 50 Ah / 100 Ah lithium-ion battery packs ( under development by Automotive Research Association of India )
Direct Benefit Transfer ( DBT ) of the Carbon Credits earned , into the accounts of EV Manufacturers , as detailed in earlier blog “ Piyush Plan
Only with such “ Out of the Box “ reforms , it will be possible for Auto Industry to gear up for a 10 % EV production increase each year , so as to reach 100 % in ten years , between 2020 – 2030
=======================================================
#   Incentives to “ Electric Public Transport “ owners ( taxies / buses / rickshaws etc ) :
No GST on provision of “ Transport Services “ to corporates or individuals
No road tax / municipal taxes
Free charging at Charging Stations set up by PSUs ( NTPC – BHEL – IOC – HP )
Free parking in “ Pay-and-Park “ plots
No income tax ( personal or corporate ) on business income
=======================================================
#   Incentives to CITIZENS , for using PUBLIC TRANSPORT :
Incentive Scheme for citizens who wish to exchange their existing petrol / diesel vehicles ( 2 wheeler / 4 wheeler ) for Electric Vehicles
Incentive Scheme for citizens who do not own ANY vehicle and buying an EV
======================================================
#   Incentive for large Co-operative Societies who come forward to set up Battery
     Charging Station within the society premises , for use by Members and the Public
======================================================
Dear Shri Gadkariji / Shri Amitabh Kantji :
I hope some of the above mentioned suggestions will find a place in the Road Map for Electric Vehicles
11  Oct  2017
--
Regards,

Prakash Javadekar,
Minister of Human Resource Development,
Govt. of India

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