Expectation of EV makers from Union Budget 2022-23
Premium- Overall EV sales in December clocked 50,866 units, recording a 240% year-on-year growth
The Union Budget 2022-23 awaited by all stakeholders with baited breath will be a key to setting the tone and roadmap for the FY 2022-23 for the economic revival of India. The Automotive sector companies were recently extended the guidelines for production linked incentive (PLI) scheme by the Government towards building Country’s self-reliance and to promote domestic manufacturing – which probably sets the preface to the Union Finance Budget.
Anticipated to be a progressive Budget to boost job creation, consumerism and the rural economy, there are concerns about the supply side which is impacted by the global semiconductor shortage. The scenario is likely to remain a bit uncertain in the short term, however, to help the sector wade through, the sector is looking forward to rationalisation in the tax structures and incentivizing innovation and R&D initiatives.
Tax Rationalization to Speed-up EV adoption
Electric Vehicles (EVs) have gained significant traction. However, just adding more EVs to the existing fleet in the name of reducing carbon emissions is not the solution as it will only make the roads more congested. Therefore, the need to have in place an effective scrapping policy, and introduce provisions to allow retrofitting and conversion of ICEs to EVs, thus making renewable mobility accessible to everyone.
According to Arun Sunny, Founder & CEO - Trouve Motor, “For mass adoption of electric vehicles, people expect the convenience and availability of the EV charging infrastructure – ideally, one charging station in 3x3km area and every 20 km on highways, hence incentivising infra-development and rules & schemes to promote swapping of batteries will help. Rationalising the tax (GST) regime on battery and other components used for manufacture of electric vehicles will go down well to further cost management, benefits of which can be passed on to the customers. Further tax benefits for home-grown EV manufacturers who make it from scratch, to promote the cause of Make-in-India."
“As a solution to traffic congestion, we suggest extension of FAME II subsidy to promote conversion of ICE vehicles to electric and for electric two-wheelers above Rs. 1.5 lakhs, in addition to RTO approvals for retrofitted electric vehicles. Extension of tax benefit for buying electric vehicles under 80EEB for two more years and easy collateral free finance for start-ups that foray into EV retrofitment and manufacturing to setup operations will be a welcome step." added Arun Sunny.
“In the last decade, the government of India (GOI) has announced policies and regulations like Faster Adoption and Manufacturing of Hybrid and Electric vehicle (FAME), which was supposed to end in March 2022 but has been extended till 2024, to encourage the EV industry. However, the sector still requires a uniform policy to promote EVs across the nation, making it easier for businesses focusing on green transportation to expand their footprint." says Ketan Mehta, CEO and Founder – HOP Electric Mobility.
Mehta further mentioned, “As EV manufacturers, we expect the government to correct the inverted duty structure. As of now, GST input on raw materials is 18-28%, while outward supplies stand at 5%. By amending this framework, the government can help manufacturers like us to optimize cash flow. While tax exemptions up to INR 1.5 lakh were announced in 2019 on the interest paid on loans taken to finance purchasing of electric vehicles. While this was laudable, we believe more such tax benefits and subsidies will motivate EV buyers and end-users."
Financing and incentivize digitization
According to a report by JMK Research and Analytics – December 2021 electric vehicle registrations crossed the 50,000 units mark in a month. Overall EV sales in December clocked 50,866 units, recording a 240% year-on-year growth from the number recorded in the corresponding month in the previous year. However, EV acquisition due to high cost and lack of financing options is a concern.
"EV-financing will become the biggest enabler for Electric Vehicle adoption in the next few years. Attractive economics and push by governments has already increased the demand for EVs substantially, however the Commercial EV segment, which is expected to be a key growth vertical, is faced with a lack of financing options, hence remains the biggest challenge. The industry has the potential to grow to USD 150 billion by 2030, hence the Finance Minister's attention to ease accessibility to financing, particularly for the unbanked will do good to the segment." said Sameer Aggarwal, Founder & CEO, of RevFin Services .
Need for a Conducive environment for EV
“Provisions for enabling fast-charging infrastructure across India, will be expected. To do that, the sector expects the government to provide subsidies to motivate EV manufacturers and businesses. While states like Maharashtra, Punjab, and Bihar offer varying levels of subsidies on charging stations, the same should be encouraged across the country to boost the confidence of EV buyers." said Ketan Mehta, CEO and Founder – HOP Electric.
Rajeev Chaba – President & Managing Director, MG Motor India, said, " We are aligned to play our part in seeing that the direction meets reality sooner rather than later. ZS EV’s success in the market marked the beginning of a truly collaborative ecosystem-building approach to electric vehicles in India. In our endeavor to broaden access to wider customer segments, we will bring to the country the second EV. Based on the global platform, the new EV will be developed & expected to be priced between Rs. 10 lakhs to Rs. 15 lakhs addressing the mass segment. The car will be customised to meet Indian regulations, longer range, suit the terrains and climatic conditions. Further, to meet the Government’s guidelines for the production linked (PLI) scheme, we will undertake maximum possible localisation, which would include battery assembly and other parts. With all these initiatives in place, we expect EVs to contribute over 20% to our overall sales in the next 2 years."
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