New Delhi: As the countdown for the Union Budget begins, the EV industry expects the government to take a step forward by announcing reforms aimed at decreasing the compliance burden on businesses in order to encourage more enterprises to invest in the country. The industry heads have voiced their demands before Finance Minister Nirmala Sitharaman, who will be presenting the Budget on February 1.
Here are the excerpts:
Pankaj Kumar Gandhi, managing director, Chartered Speed
The economy is in a recovery mode but still needs vital support to get back on track. In the time of the pandemic, we look forward to the Budget allocations on public transport and infrastructural solutions. Focus should be on more reforms and incentives to accelerate growth of EV consumption in the country. We are optimistic about the Budget. We support the cause of zero carbon footprint which is encouraged by the government. This will enable exponential growth in the EV industry. India is inching towards an electric revolution and we have the potential to become a global hub of EVs. We expect this Budget will take a step forward in reforms aimed at decreasing the compliance burden on businesses in order to encourage more enterprises (domestic and global) to invest in the country.
Ashish Aggarwal, founder and CEO, VA-YU
The EV industry is in need of funding and the government can play a major role by bringing it into priority sector lending and by financially supporting start-ups in this sector. The GST on battery packs should be aligned with the GST on EVs and the government should implement a cohesive strategy for the domestic manufacture of EV batteries. And lastly, while tax incentives are offered to individuals on EV purchase, the same should also be available for corporates and start-ups.
Anmol Bohre, managing director and co-founder, Enigma
The Union Budget must restructure the use of FAME II funds since just 5 per cent of the Rs 10,000 crore allotted under FAME’s second phase was used from April 2019 to March 2021. As a result, the Budget might recommend certain changes to boost incentive take-up. Furthermore, the GST on lithium batteries is now levied at 18 per cent when sold separately and 28 per cent on lead acid, along with certain spare parts, while the vehicle sold with battery is levied at 5 per cent; and because the MoRTH has permitted the registration of EVs without batteries, cars without batteries should also come within the EV GST category. As a result, we hope the government will cut it to 5 per cent, equivalent to the GST on EVs. In the reconstruction phase of the economy it is critical that the MSMEs have simple, flexible, and seamless access to finance. We anticipate that the Union Budget would include schemes similar to SLS II-NBFC 2021 in order to immediately revitalise the economy by assisting the MSME and the emerging fintech ecosystem. Unlike the Budget 2021, this year, the government must utilise the opportunity to lay out changes focussing on the long-term goals for the EV segment which shall prompt a substantial surge for vehicles across sectors. This shall also empower the EV segment to flourish.
Jeetender Sharma, managing director and founder, Okinawa Autotech
The automotive industry accounts for nearly half of the manufacturing GDP and nearly 8 per cent of the overall GDP. With the switch to e-mobility, there is a significant shift in which a large amount of innovation, R&D, investments, and engineering have started to flow. The Union Budget will be presented on February 1, and industrialists and manufacturers will be watching with bated breath. There are certain supply and demand-side incentives that we expect the government to introduce to provide further impetus to the EV sector. These are:
Demand-incentives; driving mass penetration of EVs
- a) One of the biggest roadblocks to the adoption of EVs is the lack of awareness and trust. The government must introduce and invest in awareness programmes through various channels.
- b) It must be made mandatory under the Go Electric initiative of the Centre for each state in India to have its own dedicated EV policy. So far, there are more than seven states that have introduced exceptional incentives for the purchase of electric vehicles by individuals as well as corporations and these have proven to have created a highly positive and enabling ecosystem for EVs.
- c) The government should introduce standardised EV charging infrastructure across the country to ensure far better availability and wider acceptance, hence mass penetration of EVs.
- d) The nationwide use of EVs, especially for last-mile deliveries, should be made mandatory. The electrification of the last mile is of extreme significance in mass penetration of EVs in India that will help businesses save costs and at the same time, contribute to the environment. While the Delhi government has placed the stepping stone for this, other state governments should also be encouraged to take similar initiatives.
Supply-incentives; a boost to OEMs and ODMs
- a) Although the objectives and targets appear to be a tall order, India’s Make in India programme provides the right direction for automakers. A closer examination reveals that it is not only feasible but also highly desirable. In fact, in the post-Covid economic dynamics, it is a requirement. We are lacking in our ability to effectively implement this initiative.
- b) Promoting Atmanirbharta in India’s EV sector with the PLI scheme. This will reduce import dependency and diversify the product mix, as well as provide a level playing field for India's OEMs to compete globally.
- c) Other initiatives such as lowering the GST rates on raw materials, allowing duty refunds for research and development, and capital expenditure on the development of futuristic EV technology should be considered.
Rajesh Gupta, founder and director, Nupur Recyclers
The voluntary scrappage policy was announced a year ago. This was done in order to phase out polluting and unfit vehicles. Additionally, from a business standpoint, these will benefit the automobile and recycling industries. As part of India’s metal recycling industry, we feel that the government must look at establishing a ‘Think Tank’ comprised of government representatives and industry bodies to help ensure the successful implementation of this policy. Secondly, the import duty on ferrous scrap imports was reduced to zero per cent till March 31, 2022. In this Budget, we urge the government to continue with zero duty on all types of scrap imports for the next year or so, as this has proven to be highly beneficial for the metal recycling sector.
Amarjit Sidhu, executive director, Detel
As the countdown for the Union Budget begins, the EV industry expects it to be included in the priority sector lending list to boost e-mobility in India. We really appreciate multiple initiatives by the government to amend the faster adoption of electric vehicles. In the Budget, we hope the government will announce some specific sops, especially in the EV charging infrastructure segment. With the promotion of clean energy priority on the governments’ agenda, we would welcome it if the government could encourage various green technology policies and incentives to promote sustainability among EV automakers.
Yogesh Bhatia, managing director and CEO, LML Electric
We are certainly looking forward to the Budget for what the government is going to unveil. The Indian automobile sector is exponentially growing at an average rate of 24 per cent, thanks to the incentives and subsidies to the electric segment. This constant support from the government will result in the entire transformation of the auto sector towards EVs in no time. It is evident that the Make in India program is exactly what the industry required especially in this post-pandemic era. And we really appreciate the recently introduced PLI scheme, which is consequently set to increase domestic manufacturing of vehicle products. We at LML electric, are most willing to take the advantage of these reforms with manufacturing the globally engineered products in India. We foresee the government to support battery cell manufacturing which can further reduce the import dependency. Moreover, due to the pandemic and other geopolitical conflicts, the world is already going through turbulent times especially when it comes to global manufacturing of components such as the shortage of semiconductor chips and other related parts. Thus, we believe, the need of the hour for our country is to gear up and build ahead of a significant infrastructure in order to reduce further dependency for essential components on other countries.
Maxson Lewis, managing director and CEO, Magenta
The fundamental key expectation that we have from the Budget is that charging infrastructure in the country should be enabled at a faster rate. We hope the FAME scheme will increasingly encompass EV charging infrastructure a lot more than what we see in the preceding years. In terms of EV charging, we expect that the Budget will address the critical issue of addressing EV charging via Open Access, as well as the associated taxation and wheeling costs. This will necessitate a rethinking of the CERC and Open Access through the perspective of the permitted activity. To reduce working capital constraints in the EV charger manufacturing business, the government could offer end-use-based advantages to the EV industry, such as cutting GST rates on raw materials and permitting duty-free imports, refunds for research and development, as well as capital spending on EV chargers. We would like to urge the government to grant R&D incentives to EV companies. Given the government’s Aatmanirbhar India plan, India must take the lead in creating innovative technologies that will alter the EV industry. To make this happen, the government should incentivise industries and academia to collaborate.
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