ISLAMABAD: The Engineering Development Board (EDB) Thursday circulated the draft Electric Vehicle (EV) policy 2020-25 amongst stakeholders after facing harsh criticism in the Cabinet on March 25, 2020, well-informed sources told Business Recorder.
According to the draft policy, since hybrid technology does not require additional infrastructure development, which is one of the major prerequisites for EVs, hence the thrust of this policy is to provide an incentive structure. This is suitable and feasible for establishment of local manufacturing capabilities in EV within the country.
The EDB says that since the transport sector in Pakistan is not a monolithic segment but comprised of various sub-sectors, separate interventions are being proposed for 2-3 wheelers, 4-wheelers, trucks and buses. At the same time, the implementation may be carried out in a phased manner. Incentives for electric scooty, electric motorcycles, rickshaws and loaders, cars, buses and trucks will be considered in this policy document which will become an integral part of the Automotive Development Policy (ADP-2016-21). The policy provides a framework which will bring necessary transformation in a planned and phased manner causing minimum disruptions while at the same time having a positive socio-economic impact in terms of industrial growth, employment generation and improved environment for future generations. The policy paper, while primarily promoting EV technology, also aims to promote other fuel efficient technologies like hybrid, fuel cell etc. The hybrid technology is common in new vehicles (4 wheelers and heavy vehicles) having lower consumption as compared to the normal fossil fuel vehicles. The advanced vehicles like fuel cell are expensive and also need hydrogen fuel cell stations. However, introduction of hybrid vehicles will be feasible for local manufacturers in case the market exhibits growth in upcoming years.
As identified earlier, and due to the fact that current EV technology development stage is associated with higher costs, EV penetration in Pakistan may not be possible initially without government support. EVs costs much higher than their FFV alternative and governments around the world have extended subsidies, incentives and tax breaks for EV adoption. These initial incentives, tax breaks and benefits are expected to pay for themselves with the savings in fuel import bill, reduction in emission related expenses, usage of idle electricity capacity and income from charging revenues, although current cost-benefit analysis models advocating such savings are still theoretical at this stage.
Due to the present fiscal and economic situation of the country, the Government may not be able to provide direct consumer subsidies for EVs. Hence the proposals in the policy are aimed at reduction in duties and taxes on components not being manufactured locally. These incentives will also be available for hybrid as well as other fuel efficient and environmental friendly technologies.
As car segment is already operating under ADP 2016-21, following incentives have been proposed for cars, sports utility vehicles (SUVs) and Light Commercial Vehicles (LCVs) in line with the policy.
Localized body parts proposal 25% Tariff for both new entrants under ADP and existing players till June 30, 2021 45% after 2021 till policy period (adjustment under new policy beyond July 2021 to prevail accordingly). 10 per cent customs duty on motor drive train and battery, etc (adjustment in new policy to prevail).
Parts specific to hybrid or other advanced technology (hybrid applicable to non-localized parts under ADP 2016-21. GST will be charged at 5 per cent at par with tractor industry to encourage the EVs and locally manufactured hybrid vehicle penetration.—MUSHTAQ GHUMMAN
