Subsidy necessary to promote electric transportation: Ashoka Leyland

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Ashok Leyland Chairman Dheeraj Hinduja has said that a better-defined payment security mechanism for long-term contracts will prove helpful in promoting electric buses in the country. Speaking to PTI, Hinduja said that subsidy also has importance in increasing the acceptance of electric transport in India. He said, “So I would say about two areas – one is subsidy or any other benefit which the government can give to promote electric vehicles. Second, some type of payment security mechanism is needed. With this the industry will be able to move forward at a faster pace.

Subsidy will get a boost

He was asked what steps could be taken to promote electric vehicles in the country. “When you look at these 10-12 year GCC (gross cost contract) contracts, original equipment manufacturers (OEMs) definitely want some protection,” Hinduja said. They want to know how payment will be ensured over such a long period.

Financial condition of many STUs is bad

Payment Protection Mechanism is a payment protection fund, which provides interest-free capital in case of default in payment. In case of electric buses, the responsibility of uninterrupted payment to the service provider rests with the State Transport Undertakings (STUs). The financial condition of many STUs is bad. Therefore, electric bus manufacturers are demanding the government to set up a security fund similar to what already exists in the power sector.

Better work is being done by the government

Hinduja said that overall the government is doing a very good job in meeting the need of clean fuel and making cities pollution-free. “The government has also provided subsidies for the production of electric vehicles… so many private customers who have a commitment to net zero emissions are buying vehicles directly, irrespective of the subsidy,” he said.

Light commercial vehicles dependent on subsidies

Hinduja said that if we talk about buses and light commercial vehicles, it depends on the government’s support in terms of subsidy. He said, “Wherever there is support from the government, there is a clear increase in demand.” Ashok Leyland is the second largest commercial vehicle manufacturer in the country.

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