Automobile & Electric Vehicles (EV) sector expectations from Budget 2022: As Union Finance Minister Nirmala Sitharaman is all set to present her third Union Budget on February 1, 2022.
Here’s what the Automobile & EV Sectors expects from Finance Minister Nirmala Sitharaman:
Ashish Aggarwal, Founder & 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. GST on battery packs should be aligned with the GST on EV’s 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.
Shubhankar Chaudhry, CEO, One Moto India:
To create a robust ecosystem for Electric Vehicles and give a boost to the EV market, the Indian government should focus on putting EVs in the priority lending sector, as currently very few NBFC’s and financial institutions are providing affordable lending to potential end-users as well as fleet operators. Additionally, the Government also needs to push for more R&D in affordable and indigenous battery technology development, which currently is the biggest pain point for EV players. Our current dependence on lithium imports of which 90% is dominated by Chinese players is a strategic disadvantage for Indian EV manufacturers.
Sumit Garg, MD & Co-Founder, Luxury Ride:
Given the covid-19 situation, the auto industry has made a paradigm shift towards online buying and selling of automobiles which was previously dominated by the offline market. The buying and selling of vehicles through online platforms have increased tremendously irrespective of the type of vehicle, be it normal or luxury vehicle. Ahead of the budget session, I am hoping that the forthcoming Union Budget 2022 continues to promote the digitization of automobile sector laws, which will lead to increased vehicle sales, and also promote faster transfer of ownership.
Paving the way forward, I am hoping that our government will support cheaper taxes by giving some relaxation on the GST rate on used cars. The reduction in GST will give the desired push to the industry and will ramp up the transition from an unorganised to an organised sector, which will bring more business under the GST umbrella and put an end to tax evasion. Also expecting some good announcements in favor of chip shortage, electric vehicles which will bring lucrative advantages to the Auto Industry.
Akshit Bansal, Co-Founder, Statiq:
As an industry and an EV charging service provider, we would first welcome some clarity regarding the GST issue on electric vehicle charging as a service. Products in the EV eco-system are being taxed at the 5% GST slab, while EV charging is generally classified as a service and taxed as one at the 18% GST slab. We would like to be allowed to accrue the same benefits as the larger industry and be classified under the lower slab in order to boost overall EV usage and be able to pass on the cost advantage to consumers.
If the central government can consider providing a direct tax subsidy for purchase of EVs and for players in the process of establishing the EV charging infrastructure, that would be another boost to the segment. Also, since only a direction has been provided to the central and state nodal agencies, but not the respective budgets, a budget for the same would be a welcome move. Currently, a large share of the components for both EVs and EV-related services are imported and the same are taxed at premium rates.
If the government were to provide a limited window period of relaxation on these taxes, it will result in the direct boost of local assembly, manufacturing and consumption. By the “Make-in-India” route, we can look at manufacturing these components locally, in the long run. If the Govt can consider providing a direct tax subsidy for purchase of EVs and for the process of establishing the EV charging infrastructure, that would boost the segment.
Mridu Mahendra Das, Co-founder & CEO, Automovill:
Post-pandemic the startup ecosystem is booming at a neck break speed in terms of funding and adoption. However, an increase in economic activity is yet to be seen which is giving revenue pressure for startups. Govt should introduce some flexibility in attracting or remitting foreign funds for companies that are registered under startup (DPIIT programs). This should help startups ease the processes involved, give laxity in penalties for any delay in GST or such statutory filings, ensure quick resolution of any disputes of compliance-related matters. It will save a lot of time for founders to focus on work and also ease up the funding process which gets on hold for such statutory filings.
Specifically in the after-sales automotive segment import duties on certain parts (specifically electrical, electronics etc) should be lowered as the manufacture of such parts in India had a roadblock due to chip/sensor issues. Discontinuation of certain vehicles (10+ year old vehicles in Delhi) should be phased out or should be allowed to run with additional fitness requirements which will increase more revenue options for after-sales ecosystem players. Regular industry connects activities between OEMs and after-sales players, relaxing certain norms for Govt Auto claim process also helps after-sales players get a fair playing ground in comparison to OEMs.
Prashant Kumar, CEO & Co-Founder, Zingbus:
As Finance Minister Nirmala Sitharaman is set to present the budget for FY 2022-23 to boost the current economy, we are looking forward to the shift in focus towards Electric Vehicles. Now is the time where the government should leverage the benefits towards EV’s and target sustainable development. The industry is even seeking easier capital access for charging infrastructure to shape the future of eco-friendly India. A complete implementation of the Motor Vehicle Act, 1988 by all the state transport authorities would also be a welcoming step.
Strategic planning and robust execution are required on many aspects to ensure the travel sector gets benefited in the long run. Clarification and transparency in the GST rulings for the sector are much sought after, implementation of which will help operators as well as travellers. The outlook of the travel and tourism industry needs proper execution through a grounded plan for better performance. The country is tumbling towards the new rise of the COVID-19 situation, and with it, the government needs to ensure a safety net for this industry.
Tanesh Gagnani, Executive Director, Akasa Finance Limited:
Owing to the surge in fuel costs and talks about a sustainable future, there has been a significant growth in the market for electric vehicles. The government has laid down an extensive plan under a portal called e-Amrit to support faster manufacture and adoption of EVs and its allied infrastructure such as batteries and charging stations in India. Furthermore, the electric vehicle manufacturing industry is predominantly financed by the non-banking lenders and angel investors in India. These lenders realise that the EV industry will flourish exponentially in the future and are credit worthy considering increasing affordability of the vehicles and the bullish trends of EV companies.
Jerin Venad, CEO & Co-founder, CityFlo:
As our cities grow, urban mobility will remain a major challenge for Indian cities. Given the role private bus players will play in solving this problem, there is a need for government interventions to be favorable to this sector. Given the advent of electric vehicles, the state-sponsored subsidy and the financing infrastructure would be a welcome push for private bus companies.
Private buses in India continue to pay more road taxes than personal cars. Given the positive impact that buses have on our collective lives (especially, for our cities), it’s important to implement a significant reduction in road taxes for buses. Such an initiative this year will also help boost the recovery of the bus industry, which has suffered heavy losses and permanent capital loss during the pandemic.