The electric vehicle industry in India is advancing at a rapid pace. However, industry players note that it still needs some hand-holding as it is yet to mature. There is almost a consensus on the government continuing FAME subsidies in FY25. Along with that, many industry players have asked for GST parity for EV batteries, as well as financial incentives such as tax credits, subsidies, and low-interest loans.
Here’s what the industry players are asking from Finance Minister Nirmala Sitharaman.
Hyder Khan CEO Godawari Electric Motors
“I eagerly anticipate the upcoming budget with optimism and a fervent hope for increased support towards the electric mobility sector. The extension and enhancement of the FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) scheme would be instrumental in propelling India towards a sustainable and eco-friendly future. Substantial subsidies for electric vehicles and related infrastructure would not only incentivize consumers but also bolster the growth of our industry. These measures will not only promote cleaner transportation but also stimulate innovation and job creation. I look forward to a budget that recognizes the pivotal role electric mobility plays in achieving environmental goals and economic development, and I trust that the government will continue to foster a conducive ecosystem for the electric vehicle industry to thrive.”
Akash Gupta, Co-Founder and CEO, Zypp Electric
“Prioritizing the electric vehicle (EV) sector is crucial for a sustainable future. First, inclusion in the priority lending scheme will fuel growth by facilitating easier access to capital. To accelerate the adoption of EV-led delivery services, a reduction in GST for EV services from 18% to 5% is imperative. While EV purchases enjoy a 5% GST rate compared to 28% for internal combustion engine (ICE) vehicles, a similar distinction must extend to services. Furthermore, introducing usage-based incentives for EV drivers, in addition to existing FAME buyer incentives, will be a game-changer. Rewarding users based on carbon savings and kilometers driven creates a tangible incentive for sustainable choices.
Addressing the last-mile delivery gap is equally critical. Recognizing last-mile delivery as a distinct sector under logistics policies is essential, given that one-third of shipments fall within this category. Establishing industry standards, supporting gig delivery partners with tailored schemes, and implementing standard operating procedures (SOPs) will enhance efficiency and foster growth in this vital but often overlooked segment of the logistics industry.”
Niranjan Nayak, MD, Delta Electronics India
“The electric vehicle (EV) industry in India has gained momentum thanks to the government’s efforts in promoting EV adoption through various initiatives. However, we see untapped potential, and the upcoming budget could further boost the industry’s development.
Firstly, we expect the government to continue offering incentives and subsidies for manufacturing and purchasing EVs. These measures effectively drive demand and lower upfront costs. Extending these incentives and reducing import duties on EV components can make electric vehicles more affordable for everyone. Additionally, a critical focus should be on establishing a widespread charging infrastructure network nationwide. Insufficient charging stations are a concern for potential EV buyers. Allocating budget funds for strategically locating charging stations on highways, in cities, and in residential areas is essential.
Furthermore, the government should prioritize research and development in the EV sector. Continued investment in advanced technologies, like battery technology and energy storage solutions, is crucial for long-term growth and sustainability. Provisions in the budget supporting innovation and collaboration between industry players and research institutions would be beneficial.”
Arun Sreyas, Co-Founder, RACE Energy
“The infusion of funds within the FAME scheme highlights the government’s dedication to promoting the widespread adoption of EVs. However, it’s crucial to acknowledge battery swapping’s pivotal role in this growth. Presently, a notable disparity exists in the GST rates between EVs sold with fixed batteries (taxed at 5%) and the lithium-ion batteries utilised for swapping purposes (taxed at 18% when sold separately). With the Interim Budget announcement in February, we’re also expecting GST parity for EV batteries used in swapping—crucial for competitive pricing—and they should hopefully align with the 5% bracket to fortify the EV landscape. We also hope that the registration process and subsidy mechanism for battery swapping vehicles will be defined under the guidelines of the FAME scheme.”
Avinash Sharma, Co-Founder & CEO, ElectricPe
“In the past year, favourable Government policies and confidence in the sector has led to a surge in EV sales and production, exiting the nascent stage. With the upcoming budget we’re hoping for an equitable landscape with subsidies and incentives, across state and centre. This will not only increase production, but also sales, usability and support. The extension of FAME 2 to FY25 is in itself a great sign for the continued development of the industry. Additionally, the GST rate on batteries needs to be lowered from 18% down to 5%, in line with Battery EVs, which will bring battery swapping and battery subscription in line with traditional EVs, a much needed step. With regards to GST, there is also a need for parity of 5% GST rate across states for charging, to enable faster adoption of EVs and infrastructure development, which we hope we will see in this budget.”
Samarth Kholkar, CEO and Co-Founder, BLive
“The anticipation is that the government will incorporate the Electric Vehicle (EV) sector into Priority Sector Lending (PSL), facilitating more accessible financing options for both personal and commercial electric vehicles. Additionally, there is a hopeful outlook for policy initiatives aimed at advancing EV adoption. This includes the extension of subsidies to enhance the affordability of electric vehicles and the implementation of incentives for conversion kits, encouraging the transformation of Internal Combustion Engine (ICE) vehicles into Electric Vehicles (EVs).”
Narain Karthikeyan, Founder & Managing Director, DriveX
“As we anticipate the Interim Budget 2024-25, we recognize the pivotal role it plays in shaping the economic landscape, particularly for the two-wheeler auto industry. The potential benefits that could arise from individual taxation reforms hold promise for our industry. With the government’s focus on stimulating consumer spending, the possibility of tax incentives or reductions could significantly boost the demand for pre-owned two-wheelers.”
Charith Konda, Energy Specialist, India Mobility and New Energy, IEEFA.
“FAME II included subsidies for electric 2-wheelers, 3-wheelers, 4-wheelers, and electric buses based on certain qualifications. The same can be extended to medium-duty trucks and tractors to drive the electrification of new vehicle segments and transportation in rural areas.
Uniformity in GST rates across the EV supply chain can lower the cost of EVs further. While 5% GST is applicable for fully built-up EVs, several components such as batteries and charging stations have an applicable rate of 18% GST. This difference in tax rates affects the uptake of new business models like the battery swapping model, where battery services attract 18% GST compared with EVs with batteries included at 5% GST. The government may accord priority sector lending status for electric vehicles and electric vehicle infrastructure to increase the credit flow to these sectors thereby reducing the cost of funds for the EV sector.”
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