Budget 2023: Expectations of EV sector this year
In the current context, India has made steady progress in the EV market in recent years. As a result, it is expected that EVs will be one of the critical sectors of the country’s economy in the upcoming Budget. What the Indian EV Ecosystem wants now is a “Unified and comprehensive Approach for Green Mobility”. In the forthcoming Budget, the industry leaders will look for tax cuts, increased production, and stable schemes and incentives as key expectations for the upcoming Budget. Regardless, all of the initiatives will contribute to the global expansion of India’s EV industry.
FAME-II should be extended for another three to five years to continue supporting E-mobility. This will aid the long-term development of India’s EV segment by mainstreaming EVs with a 20-25% penetration level. It’s worth noting that FAME has facilitated expanding EV penetration, but we’re still only at 5%. If the subsidy is not extended, electric vehicle prices will skyrocket, stalling and derailing India’s E- Mobility movement. To ensure technological advancements and increased EV adoption, the FAME II scheme should be defined more explicitly and inclusively. A level playing field for both established and new players in the segment should be established.
Banks in India have been hesitant to provide finances for electric vehicle purchases because the cost of insuring these vehicles is high, and the marketplace is small. Recognizing this, the government should focus on green financing, enabling low-interest financing for electric vehicles. As a result, EVs will become more affordable. As the country works to decarbonize its transportation sector, the Indian government and the World Bank are already discussing the implementation of a risk-sharing mechanism to compensate banks that make loans for electric vehicle purchases.
More incentives and pushes for EV and EV component manufacturers to make India a manufacturing hub in this space can be expected. The inverted duty structure needs to be revamped. The manufacturers have sought a correction to lower the overall cost of vehicles in order to propel the country’s EV industry, which is still in its early stages. Electric vehicle batteries, if not other materials, should be subject to a lower tax regime, which would benefit manufacturers greatly. Carbon credits can be contextualized further and used as a manufacturing incentive for players who emit fewer carbon emissions.
Lastly, because the sector is driven by extensive research and development, an additional tax deduction for companies spending on research and development activities relating to electric vehicles and their components should be considered. R&D funding for green technologies that support net zero carbon emissions could be increased.
This year is a major turning point in India’s G-20 presidency and the country’s clean energy transition and economic transformation. For India to realize its full potential and transition to an era of electric vehicle mobility, all relevant stakeholders must recognize the issue’s importance and collaborate to make it a reality by combining all variables.
(The author is Mr. Rahul Jain, Director – Crayon Motors and the views expressed in this article are his own)