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Union Budget 2024: EV industry seeks incentives and tax rationalisation
India's EV industry looks for FAME-III, fund allocation for charging infrastructure, incentives for localising components, and reduction of GST on EVs.
With Finance Minister Nirmala Sitharaman scheduled to present the Union Budget 2024 on July 23, India's electric vehicle (EV) sector is optimistic about potential announcements that could spur industry growth, ANI wrote.
What does the EV industry want from the Union Budget 2024?
The industry expects the introduction of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India (FAME) - III, funds for public charging infrastructure, incentives for localising components, and reduction of GST on EVs, among others.
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“The industry hopes the FAME scheme will expand to include private buses and commercial vehicles (CVs), which have so far been limited to State Transport Undertakings (STUs)," Aryaman Tandon, Managing Partner at Praxis Global Alliance for the Mobility sector told ANI. "Reducing customs duties on imported EV components and supporting local R&D in battery technology, as seen in the last budget, will further accelerate local manufacturing and create jobs.”
EV adoption increased by 48% in 2023 primarily due to government subsidies like FAME-II, ANI quoted Nimish Trivedi, the founder & CEO of Evera, as saying.
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The FAME Scheme, initially introduced in 2015, promotes electric and hybrid vehicle adoption in India and has completed two terms; FAME-I and FAME-II.
“We expect the government to consider reducing GST rates on EV components and batteries from the current 18 percent to 5 percent,” Mukesh Taneja, CEO and Co-Founder at GT FORCE told ANI. "This tax rationalisation would help offset potential price increases resulting from the conclusion of subsidy programmes and keep EVs affordable for the masses."
Why does India's EV industry want all these new reforms?
All this comes at a time when global electric vehicle sales have been slowing down. India is no exception.
India’s EV two-wheeler market has saw registrations falling by 27% in May compared to the previous year, according to a Mint report.
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This led Ola Electric founder and CEO Bhavish Aggarwal to write a post on X (Formerly Twitter) advising EV companies to invest more on the product and its supply chain and lesser on its marketing, or what he called as “cute” ads.
Capital costs and a shortage of rapid-charging stations are major reasons for slowing EV demand worldwide, ANI wrote, citing Goldman Sachs.
