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:
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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 :
=======================================================
EESL , lease cars , do not buy ! [
16 Aug 2017 ]
=======================================================
Waiting to be proved wrong ! [
30 Sept 2017 ]
PIYUSH
PLAN ? [ 27 March 2016 ]
=======================================================
And
should EESL “ lease “ 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
www.hemenparekh.in / blogs
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--
Regards,
Prakash Javadekar,
Minister of Human
Resource Development,
Govt. of India
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