Little to cheer for EV segment in Union Budget 2021

The vehicle scrappage policy was announced, but nothing relating to electric vehicles

In the run-up to the Union Budget 2021, there was hope that Finance Minister Nirmala Sitharaman would make announcements about two aspects of the automobile industry – the vehicle scrappage policy and electric mobility.

While a voluntary vehicle scrappage policy was announced, with details to come later, there was no announcement as far as electric vehicles are concerned. There was mention of a tax holiday for start-ups and considering there are EV start-ups, there might be a bit of cheer.

Chetan Maini, Chairman and Co-founder, SUN Mobility, said: “When it comes to electric mobility, the main expectation was a firmer commitment from a policy standpoint by the government for accelerating e-mobility and enabling charging and battery swapping infrastructure in the country for the same.

“One of the key measures for doing so would have been to fix the inverted duty structure for components such as batteries from 18 to 5 per cent, and for charging/ swapping infrastructure services from 18 to 5 per cent as well. While this was not mentioned during the Budget, we look forward to the GST Council taking this up and implementing it soon,” he added.

However, Maini was happy about one part of the Budget. “The announcement of the outlay of Rs 18,000 crore to support augmentation of public bus transportation services is a welcome announcement, along with the deployment of ‘MetroLite’ and ‘MetroNeo’ services for ease of mobility across Tier 2 cities and peripheral areas of Tier 1 cities,” he said.

“This opens up possibilities of providing last mile connectivity in and around these locations via electric vehicles like e-autos and e-rickshaws, provided adequate support is given by the government for setting up charging and swapping infrastructure,” he added.

“Similarly, implementation of the scrappage policy is a good move and can be further enhanced by providing additional incentive for replacing old vehicles with electric ones, instead of other ICE vehicles, for driving mass EV adoption.

“The EV industry needs to not only ‘Make in India’, but also ‘Design in India’. So, we look forward to the details of the Rs 50,000 crore innovation and R&D outlay that was announced, as well as the Production-Linked Incentive (PLI) scheme and how they can benefit the sector. These will be key enablers in making EVs take off in the country,” Maini further noted.

Naveen Munjal, MD, Hero Electric, said: “As for the electric vehicles sector, while we will didn’t have any announcements on the FAME policy, we are happy with the vehicle scrappage policy that the government introduced.

“The policy that was in discussion for a long time will definitely push the adoption of cleaner modes of transport across the country, thereby encouraging people to shift to electric vehicles. Together, we look forward to working with policy makers to further make it a conducive environment for electric vehicle OEMs in the country," he added.

Harsh Didwania, Co-founder and Director, EeVe India, said: “The budget is a step towards a robust economic reform agenda, but the budget did not talk much on the automobile sector, specifically on EV. Raising customs duty will result in an increase in the cost of EVs. Overall, this has ended up disappointing the EV sector,” he added.