New Delhi: There is good news for electric vehicle manufacturing companies and customers and that is that in the interim budget to be presented in Parliament for the financial year 2024-25 on February 1, Finance Minister Nirmala Sitharaman has announced tax exemption to promote electric vehicles. Can do. According to media reports, the electric vehicle (EV) sector is pushing for several tax and subsidy amendments and favorable policies, so that the sector can see a boom. The most prominent request of EV companies is to bring a level playing field in terms of taxation. Of particular note is the high goods and services tax (GST) imposed on EV batteries, which already form a large portion of the comparatively high upfront cost of an electric vehicle.
Demand to reduce 13 percent GST on batteries
Akhiro Ueda, CEO of EV ecosystem developer Terra Motors India, said that by reducing the GST on batteries from 18 per cent to 5 per cent, vehicles will become more affordable for EV consumers. Along with this, as soon as the prices of vehicles come down, their sales will also increase. He said that the authority to amend GST rates rests with the GST Council and not the Finance Ministry. But, entrepreneurs are hopeful that the upcoming budget speech will be very encouraging for the electric vehicle sector.
Less levy on import of EV spare parts expected in the budget
Hari Kiran, co-founder and chief operating officer of electric two-wheeler platform eBikeGo, said the sector is also exploring lower levies on imports of EV spare parts to promote cost-competition within the electric vehicle industry. The cut in customs duty on EV parts in the last budget boosted local manufacturing and a similar amendment is expected in the 2024 budget.
Expectation of expansion in FAME-II subsidy
The industry is also hopeful of extension of Faster Adoption and Manufacturing Electric Vehicles (FAME-II) subsidy, which is scheduled to expire on March 31. The subsidy encourages domestic manufacturing of EVs and provides relief to a total of over 12.16 lakh electric vehicles. The government has already spent Rs 5,422 crore on FAME-II subsidy till December 2023 and the proposed FAME-III subsidy is currently being worked on.
Rs 30,000 crore spent on FAME-III subsidy in five years
Rohan Shravan, founder and CEO of medium and heavy electric truck OEM Tresa Motors, said that as per the FICCI proposal, FAME-III is estimated to cost more than Rs 30,000 crore over the next five years. This new scheme can further boost the EV industry and continue the momentum of EV adoption in India. He said that our request would be to include EV component manufacturers as well in FAME-III, to ensure that we close all avenues for Original Equipment Manufacturers (OEMs) to directly procure from China and assemble here. Can.
Demand for expansion of PLI schemes
FAME as well as Production Linked Incentive (PLI) schemes for the sector also encouraged domestic manufacturing efforts in the last few years. Ueda of Terra Motors said it would be beneficial for everyone if there is a provision in the upcoming budget to expand the scope of PLI schemes, which can increase the overall demand for manufacturing and thereby ensure effective utilization of incentives.