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Budget 2021: Expectations of the EV, Electric Vehicles sector

Before the Finance Minister Nirmala Sitharaman presents the Union Budget in the Parliament on February 1, 2021.

Here’s what the Electric Vehicles sector expects from Finance Minister Nirmala Sitharaman:

Ms. Gunjan Malhotra, Director, Komaki Electric Vehicle Division:

After having lived in a pandemic for a year now, the new financial year is expected to be better. We consider ourselves rather fortunate that despite the massive devastation caused by the pandemic, the E-vehicle segment has mostly remained shielded from the fallout of the Covid-19 pandemic. That said, the industry can still benefit from receiving government support. Besides the economic aspect, the government also has an added incentive to invest in the E-vehicle segment as it can contribute towards the betterment of the environment.

Rising air pollution caused by fossil fuels has been the subject of concern for a while, and the E-vehicle segment can be the solution everyone has been looking for. By offering tax deductions on the interest on loans for EVs, removing the restrictions to avail input tax credit of GST paid on automobiles, and reducing the GST on lithium-ion batteries from 18% to 5%, the government can give a boost to the sector.

Mr. Greg Moran, CEO, and Co-Founder Zoomcar:

“The economy is on the road to recovery and the Union Budget 2021-2022 will be crucial for the Auto sector as it can facilitate the industry’s effective revival. We are confident that with the right policies and support, the sector is poised for growth. 

One of the key areas for both the government as well as the Auto sector is Electric Mobility. With several Indian and international groups keen to invest in the Electric Vehicle (EV) segment, the government should focus on bolstering the infrastructure to enable easy manufacturing and usage of EVs and EV-related elements such as charging kiosks to boost demand. We look forward to more tax incentives for the travel and trade industry

With regards to technology, we are in the midst of one of the biggest tech-led transitions in India and the world and we expect that this year’s Union Budget will focus more on tech-led developments in the Auto sector. It presents the perfect opportunity for the industry to capitalize on and boost growth.”

Anmol Jaggi, Co-Founder & CEO, BluSmart Mobility:

“EV fleets that provide mobility as a service (MaaS), can help more and more citizens start using EVs as their preferred mode of transport. One way to excite the fleet industry to quickly turn electric could be to waive off tolls for EV fleets for one year. 

This would bring the cost of operations down for MaaS providers and empower them to also pass down some of those benefits to the customers as well, thereby helping the complete ecosystem adopt EVs sooner. 

Also, a reduction in the tax rate on EV charging-as-a-service will boost a lot more Charge Point Operators to set up shop and take the concern around not-enough-charging-stations away from a consumer’s mind to adopt EVs.”

Nishcal Chaudhary, Founder & CEO of BattRE:

“We are expecting a GST reduction in Lithium batteries from 18% to 5%.  Also, if nationalized banks provide affordable loans for the purchase of low-speed electric vehicles. These will speed up EV adoption in India.”

Jeetender Sharma, Founder & Managing Director, Okinawa Autotech:

“2021 can prove to be a revolutionary year for the electric vehicle (EV) industry. We have high hopes from the union budget this year and are optimistic that the government will continue to take the right steps to place India on the global EV map. With that said, we urge the finance minister to reconsider the current taxation framework applicable on raw material and the final product in case of EVs. While the GST input on raw material is 18%, the tax on outward supplies currently stands at 5%, leading to an implicit inverted duty structure for us (manufacturers). This move could help in optimizing the cash flows.

The central government’s recent move to extend the PLI scheme to the automobile sector including for manufacturing of Advanced Chemistry Cells (ACC) is commendable. While this will definitely give a boost to local manufacturing, better yet, the government must also look at aggravating the domestic demand by further incentivising individual and commercial consumption of EV pan India. Such a holistic approach would create a thriving ecosystem for EVs and cement India’s position as a global EV hub offering abundant opportunities for growth and attracting huge investments for further innovation.”

Rushi Shenghani, CEO & Founder, Earth Energy EV:

Hoping for a huge opportunity in the sector to get localized, we are keeping up our expectations high on this year’s Union Budget, which will certainly bring up advancement in the sector. We expect the government’s Atmanirbhar Bharat Abhiyan to get more incentives as it aims to inspire companies and see India’s green mobility growing. To further support the localization of battery production which accounts for around 40 percent of the EV development cost, the government can reduce the GST on batteries as well as import duty slabs. It presently incorporates the GST of 18 percent on lithium-ion batteries and 28 % on lead-acid batteries. The cost of an EV can come down significantly with the GST reduction. Also, the Govt should finalize its incentives-based scrappage policy which can help create demand in the commercial vehicles (CV) segment as well.

Rajat Verma, Founder, Lohum: 

We believe import substitution is critical if we want e-mobility to be sustainable. Over 5-10 billion dollars can be saved if we produce raw material from recycling. The government should adopt fiscal policies that encourage recycling. Further, we see gaps in the battery ecosystem which is one of the costliest components of EV. Lithium-Ion Batteries need to have a 5% GST regime to normalise them with EVs. Finally, we absolutely appreciate the government’s execution of FAME 2 (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles). Subsidies are helping the ecosystem considerably and we would want the government to extend this scheme to 2025.”

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