Budget 2021 | Expect government to drive EV demand in India

By Sulajja Firodia Motwani

The outbreak of coronavirus pandemic has taken a toll over the entire world and has created a massive disruption in the automotive sector. This situation has further worsened due to the resultant lockdown and its impact on the economy. The sector has also witnessed several challenges due to a reduction in demand and an increase in costs due to regulatory changes amid emission and safety norms. There is an urgent need to revive the demand and investments in this sector, which has taken a back seat due to the current pandemic.

Our expectation from the Budget 2021 is to see further reforms, incentives and infrastructure that will drive EV consumption in India. In my opinion, as large amount of the budget allotted for this scheme remains unutilized and with the FAME II policy now in implementation mode, we request an extension of the FAME II scheme up to 2025 so that its impact and benefits reach the EV buyers effectively and enables demand acceleration. From an industry standpoint, providing short-term 'Booster Incentives' under Fame II for a period of 24 months, in the form of further higher incentives to help boost demand. The slab of incentives for Electric three-wheelers and Electric two-wheelers be increased to Rs.20,000 per KwH of battery on board (from the current slab of Rs. 10,000 per Kwh).

I feel the government should include Electric Vehicles under Priority Lending Sector to boost financing support needed to sell EVs. To protect the interest of banks and lower their risk, it can be specified that they should finance EVs, which are qualified under GOI’s FAME II scheme and limit tenure to 3 years. At the same time, the current GST rate on batteries is 18% whereas Electric Vehicles attract 5% GST. This inverted duty anomaly should be removed and the Lithium-Ion Battery should also be charged 5% GST. Electric Vehicles will be the driver of automotive technology in the future and in order to ensure that the Indian industry should lead the world in this sunrise sector and to encourage Made in India for Atmanirbharta, these inputs are required.

(The author is Founder and CEO of Kinetic Green and Chairperson, FICCI EV Committee)