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GST can revive electric scooter market

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High VAT, apart from dearth of recharging infra, behind falling sales: Hero Electric CEO

How do you view the current scenario in this segment?

Some positive change is visible but it is not yet commensurate with the potential this market has.

What is the potential market size of battery-run two-wheelers in India?

Some 1.60 crore petrol-run two-wheelers are sold in India annually, about 35 per cent (50 lakh) of them being scooters. This is our potential market — that is, we can potentially sell 50 lakh battery-run scooters.

Why did the market not take off after a promising start?

We had expected the governments to provide on-road recharging infrastructure at places like petrol stations so that users can recharge their vehicles on the go. Also, most residential buildings don’t have such infrastructure.

Only about 5,000 recharging stations could be set up in the country.

Lack of this basic infrastructure took a toll on the sales.

Secondly, the banks denied loans to electric scooter buyers. In the two-wheeler market, nearly 60 per cent of buyers opt for loans, but buyers of battery-run scooters had to shell out the entire money upfront. This also discouraged sales.

Thirdly, although the Centre’s direct incentive was available to battery-run scooter buyers, some States’ VAT — in Uttar Pradesh and Punjab — is as high as 14.5 per cent, further making the market unviable.

For instance, an incentive of ?7,000 would be neutralised by VAT ?8,000.

But the possible implementation of GST may yet help us.

How can the Centre now help this segment realise its full potential?

India’s courier and delivery services, which made the e-commerce companies what they are now, are a case in point. Some 20 lakh petrol-run two-wheelers are engaged in this sector, and many of these pollute the atmosphere.

The government can at least direct the e-commerce companies to replace these two-wheelers with battery-run ones.

How is Hero Electric going to realise its own full potential?

Our Ludhiana factory has a capacity to manufacture 220 scooters per day in a shift, which we can double easily by starting another shift.

We have sold 1.25 lakh battery-run scooters so far and hope to increase it soon with new measures like commercial launch of scooters with geared motors for buyers in hilly areas. It has already been test-launched.

These scooters will come at a 10 per cent higher price.

Besides, we plan to launch scooters with lithium-based batteries which come with a three-year warranty and an expected 15-year life.

-Source:- http://www.thehindubusinessline. com/companies/gst-can-revive-electric-scooter-market/article8812148.ece

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