The Indian EV industry seeks tax incentives in the Union Budget 2024-25 to boost the EV sales that dipped lately. Read on to know more.
The Indian electric vehicle (EV) industry is looking forward to the implementation of Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) III, fund allocation for charging infrastructure, incentives for localizing components, and a reduction of GST on EVs in the Union Budget 2024-25.
The upcoming budget is expected to further the government's goal of making EVs account for 30 per cent of total car sales by 2030. Industry experts say reducing the GST on batteries and components from 18 to 5 per cent is crucial to lowering costs and making electric vehicles more affordable when EV sales are dipping. They also called for measures to boost local manufacturing and achieve self-reliance in EV manufacturing and EV supply chain.
Union Minister HD Kumaraswamy said that though the third phase of the FAME scheme is nearing completion, it will not be included in the upcoming Union Budget.
Centre had provided a subsidy of Rs 11,500 crore under FAME II, making electric vehicles profitable to manufacturers and cheaper for consumers. The FAME 2 subsidy amount was initially Rs. 10,000 per kilowatt hour (kWh) for electric scooters, later increased to Rs. 15000 per kWh, up to 40 per cent of the vehicle cost.
Experts also emphasised the need for a budgetary blueprint for EV charging infrastructure and highlighted the potential of the MSME sector in the Indian EV industry.
Says Raman Bhatia, Founder & Managing Director Servotech Power Systems Ltd, "As India gears up for the Union Budget 2024-25, the electric vehicle (EV) sector is hopeful for significant advancements and supportive measures in terms of introduction of FAME III, tax rationalization to make EVs more affordable and accessible and a push for adjustments in the PLI scheme to boost local manufacturing further."
"A well-designed budgetary blueprint for EV charging infrastructure could greatly benefit the development of an EV charging network across urban and rural areas. This could include viability gap funding for charging stations in low-demand areas, upgrading power grids to handle increased EV charging loads, and incentivizing renewable energy-powered charging stations," Bhatia said.
The MSME sector has significant potential. By offering easy access to credit, funds for technology upgrades, skill enhancement programs, and support for market access and export promotion, the Indian EV industry can achieve more inclusive and sustainable development, Bhatia added.
Says Veer Singh, CEO, Lord’s Automotive Pvt. Ltd, "The growing awareness and increasing availability have triggered EV adoption in India in metros, tier 2 and tier 3 cities. The budget is expected to promote EV adoption in India by proposing measures to make EVs more accessible and affordable to a larger population segment.
Apart from allocating funds for developing charging infrastructure, and battery recycling facilities, the government should provide subsidies and tax incentives for EV adoption. It should also support localised manufacturing and aim to make India a global hub for EV manufacturing."