Budget 2019: Piyush Goyal rides on electric vehicles, waterways to achieve 'Vision 2030'

The Modi government, setting the tone for Lok Sabha elections 2019, painted a picture of New India 2030 using a pallet of infrastructural colors with strokes of cleaner ways to commute.

“(Prime Minister) Narendra Modi has laid the foundation for India’s growth and development for times to come. We have resolved many problems which were coming in the way of realising our full potential as a society and an economy,” Piyush Goyal, interim finance minister, said while presenting the interim budget for 2019-20.

Goyal, who was acting for Arun Jaitley, who is union finance minister for finance and corporate affairs but is in the US due to health conditions, said that India will become a $5 trillion economy by 2022 and $10 trillion economy by 2030.

The interim finance minister laid out a 10 point agenda for the next decade to make India fifth largest growing country in the world.

“It (the 10 point vision) will comprise next generation infrastructure of roads, railways, seaports, airports, urban transport, gas and electric transmission and inland waterways,” Goyal said.

The most striking point of the vision was the government’s strong intent to leverage on cleaner modes of commuting, including electric vehicles and waterways.

“This India will drive on electric vehicles with renewables becoming a major source of energy supply,” Goyal said.

He said that India will lead the “transportation drive” at the forefront with EVs ensuring “energy security” for the country by reducing “import dependence” on crude from gulf countries.

According to data collected by NITI Aayog, India’s crude import bill was close to $81 billion over the past few years, which was majorly to fuel conventional cars.

“The PM’s and FM’s mission of bringing an electric vehicle revolution to India by 2030 is a truly path-breaking move and will surely provide much needed impetus to the industry,” Society of Manufacturers of Electric Vehicles (SMEV) said in its statement, adding that the industry would welcome the government’s commitment towards making the country pollution free.

India has set a target to increase the penetration of electric vehicles from the current one percent to at least 40 percent by 2030; specifically under the new models segment being sold after 2030.

In 2017-18, 56,000 units of electric vehicles were sold which is expected to double in a year. Against three million fuel-based cars in India, in 2016-17, there were merely 2,000 electric cars.

Sector players were anticipating specific policy measures from the budget, including the roll out of the second phase of Faster Adoption and Manufacturing of Electric (& hybrid) vehicles scheme (FAME).

The scheme provides subsidy to electric vehicle manufacturers in the range of Rs 22,000 to Rs 1,60,000. While the first phase of the scheme was launched (2015) for a period of two years, it has been extended thrice to be continued till March 2019.

The second phase has failed to roll out due to lack of PMO approval. NITI Aayog and Department of Heavy Industries had prepared the scheme with a capital outlay of Rs 5,500 crore to provide subsidy as well as set up the requite charging infrastructure.

The scheme, however, was shot down by the PMO which asked for devising ways to make batteries cheaper rather than providing subsidy to manufacturers.

In this regard, the Central Board of Indirect tax and Custom had cut import duty on imported parts of electric vehicles on 29 January 2019.

The government reduced import duty on various categories of electric vehicles in a late night notification on January 29. An EV with disassembled battery pack, motor, brake system, and others which are not mounted on chassis will attract import duty of 10 percent, while an EV with assembled battery pack, and rest being same as the previous category will attract import duty of 15 percent. A complete EV being imported will attract a duty of 25 percent.

The idea behind such differentiation is based on the theory that the product that leads to value addition in India, in terms of job, should be least taxed while the product that leads to no value addition in India should be taxed the most. This was pitched by NITI Aayog during the global transportation summit, MOVE.

“Although the Government didn’t announce any direct incentive program (under FAME) for adoption of EVs in public transport segment but recent reduction in import duty levied on auto components used for EVs and commitment towards EVs will be favourable going forward,” Shamsher Dewan, vice president and sector head, corporate ratings, ICRA said.

Apart from clean fuel based cars, Centre’s New India 2030 vision focuses on leveraging the power of the country’s rivers and waterbodies.

“One of the dimensions of our vision for India of 2030 is clean rivers with safe drinking water to all Indians,” Goyal said.

He said that India’s vast coastline has the “potential of becoming the strength of the economy”.

“Our efforts in the Sagarmala programme will be scaled up and we will develop other inland waterways faster,” he said during the speech.

Government has allocated Rs 550 crore for Sagarmala during 2019-20 which is up by 44.32 percent against last year’s allocation of Rs 381.08 crore.

Sagarmala Programme is a decade long initiative that focuses on port modernisation and new port development, port connectivity enhancement, port-linked industrialisation and coastal community development.

More than 400 projects will be implementation between 2015 and 2035. According to government data, 415 projects will be undertaken of which 189 will be for port modernisation, 170 will be for connectivity enhancement, 33 will be for port-linked industrialisation and 23 will be for coastal community development.

Centre has identified 111 inland waterways across India. Of this, the first waterway (on national waterway 1), between Varanasi and Haldia was started last year.

“For the first time, container freight movement has started on inland waterways from Kolkata to Varanasi,” Goyal said.

He even said that the second inland waterway on NW2 will soon commence on Brahmaputra.

“The Government’s focus on the inland waterways sector and the SagarMala project continues, which is a positive for the shipping sector, with the potential to boost coastal as well as inland shipping in the medium term,” K. Ravichandran, group head, corporate sector ratings, ICRA, said.

He, however, said that the allocation remains low relative to the needs of the sector.

“Although the allocation for assistance to shipbuilding, research and development has increased compared to the previous year, it remains at a moderate level. In the absence of any major specific announcement for the shipping and shipbuilding sector, the impact on this sector is expected to be neutral,” he said.

According to the rating agency’s analysis, Shipping ministry will receive an additional funding of around Rs. 200 crore through Central Road and Infrastructure Fund (CRIF), inclusive of Rs. 125 crore of 2018-19.

It said that the plan to scale up the efforts under Sagarmala and speed up the development of Inland Waterways is welcoming.

Expressing his pleasure over the infrastructural allocation, union minister for road transport, highways, shipping, waterways, river development, rejuvenation and Clean Ganga mission, Nitin Gadkari said that the way India’s infrastructure is improving, be it highways, airports, river ports or sea ports, India is moving towards a New India of 21^st century that is “satisfied, content and prosperous”.