EV Players Want Tax Cuts, FAME II Extension and Financing Options for Customer

With an intrigue of what and how much the Government is planning to give to sectors, our country waits for the budget day every year. The Union Budget 2023 is all set to be tabled in Parliament by the Finance Minister, Nirmala Sitharaman.

An important thing that country will go through next year is general election. Pre-election year budget has always been lucrative one in many ways. Hence, it’s not a surprise at all to see companies and sectors waiting for the budget proposals more eagerly.

However, the global economy is under pressure, and India has been able to sail through tough times like Covid-19 and maintained its resilience so far. Many global organisations and research agencies have already affirmed power of Indian economy, which is poised to remain fastest growing among major economies in the world. In a time like this, it would be quite interesting to see what government gives to the sectors that were on priority last year.

We tried to understand what major players from Industries like EV and Smart Mobility are expecting expect from the Budget 2023.

Electric Vehicle Manufacturers were seen showing a keen interest in the budget 2023-24. Altigreen Propulsion labs’ CEO and Founder, Dr Amitabh Saran highlighted the changes which he expects from the budget.

He lauded the government for steps taken for EV manufactures saying, “It is noteworthy that Government of India’s subsidy schemes like FAME supported this development. Electric three wheelers, which are the backbone of mass public transportation across India, are leading this transformation,” he said.

He added further that GoI shall take cognizance and extend the FAME-II scheme similarly to the one given to two wheelers. Doing that will impact the livelihood of the 3W owners in a positive manner.

He appeared very bullish about the electric vehicle market of India due to the boom in Indian e-commerce space. He said that E-commerce is providing the tailwinds for rising demand in EVs for last-mile delivery.

Vehicle price is one of the biggest issues right now. Several parts are made outside of country, imported and then assembled here to make the final products. Therefore, it is very hard to reduce the vehicle price without compromising the quality. Saran suggested a solution for this problem saying, “Commercial banks need to be pushed to step in with financing support, and reduce the interest rates. We also look forward to rationalisation of GST rates. Currently, 5 per cent GST is levied on EV sales but Original Equipment Manufacturers pay 28 per cent GST for spare parts. Bringing them under the ambit of 5 per cent bracket can lead to price reduction and an uptick in EV adoption."

Lalit Singh, Chief Growth Officer of TelioEV, a SaaS platform focussed on smart mobility said that he expect speedier implementation of Faster Adoption and Manufacturing of hybrid and electric vehicles (FAME - II) as well as the GST decrease.

“We, along with the advanced chemistry cell (ACC) battery market anticipate that the GST will be reduced and brought into line with that of EVs (5 per cent).

He suggested the government that there is only one way increase adoption; it must take commercial EV funding into account. Doing this will enable quick adoption in the Electric Four Wheelers category. He added further, saying, “We demand reduced interest rates for EV finance rather than subsidies and standardized residual battery value calculation, an extension of FAME-II.”

EV Maker Etrio Automobiles’ Co-Promoter and Manging Director,  Kalyan C Korimerla expects the government to make the manufacturing capacities stronger and fortify localized supply chains in order to achieve the net zero targets by governments. “We believe that the upcoming Union Budget should focus on introducing more schemes and policies to support innovation and capacity-building, and to reward EV adoption,” he added.

He added further that commercial or cargo EV adoption shall not be a thing only accessible to larger industry players. The Budget must incentivize small businesses and MSMEs to join the ICE to EV transition bandwagon as well. “We would like to see Ease of Investing, Tax Rationalisation and EV Skilling & Upskilling as the guiding principles for the sectoral announcements in Budget 2023," he said.

Dr. Akshay Singhal, CEO & Founder Log9 Materials, A deep tech start-up, said that the government should include EVs in Priority Sector Lending (PSL) to accelerate the penetration of EVs in the country. In the upcoming Union Budget 2024, the Government should work on making financing EVs cheaper and making them more affordable for the masses. “When it comes to incentives and financial enablers, the Government must take into consideration not just the volumes of production committed by manufacturers, but also the technological superiority of the vehicles and battery technologies in terms of safety, longevity, and fast-charging so as to ensure only the best reaches the final customers,” he said.