The Tamil Nadu state government has proposed a reduction in the VAT by about 10.5%. The Delhi state government has decided to go one step ahead and not only waive the VAT entirely but also offer incentives to the buyers. This is a part of the government’s initiative to promote the use of eco friendly bikes nationwide.

The finance minister of Tamil Nadu, O Pannerselvam mentioned the reduction of VAT on eco friendly bikes from 14.5% to 5%. The increase in the price of petrol might push more buyers towards an alternate mode of transportation and the easy affordability makes it all the more better. This can be considered as an opportune moment to introduce the VAT reduction and create a pollution free environment.

However, as Kumar Kandaswami, leader, Deloitte in India rightly pointed out, electricity is a huge problem in mots of the country and without provisions for sufficient electricity to charge these bikes, the reduction in VAT might not get these eco bikes many buyers.