Budget 2022: Cut on tax on raw materials will make EV business more profitable

Indian electric mobility is a sunrise segment. The larger vision of the government to gradually shift the entire transport and mobility segment from being dependent on fossil fuels to cleaner sources of energy is crucial for the sustainable development of the country, and it is aligned with the prime minister’s commitment at COP26 of our country achieving net-zero emissions by 2070. Budget 2022 has an important role to play in sustaining the momentum that the industry has built in the last few years. Strengthening momentum Driven by government support and the industry’s dedication to charting rapid growth, the EV sector is projected to record a 36 percent CAGR growth by 2026, as per the India Energy Storage Alliance. The battery market for electric mobility is also estimated to script a record 30 percent CAGR in the same period. Hence the sector is on a strong momentum to optimize its potential in transforming mobility while making a massive contribution to India’s SDG commitments. It is therefore essential to not lose out on the momentum. Budget 2022 will be crucial in determining the sector’s growth trajectory for the coming years. The following are some of the suggestions to Finance Minister Nirmala Sitharaman: Reduction of GST input on raw materials EV and battery manufacturers are facing a challenge with an inverted duty structure. While OEMs and part manufacturers buy raw materials at 18 to 28 percent GST, they sell the final product at 5 percent GST. Reducing the tax on raw materials will not only make the business more profitable but will also make products more affordable for end-customer. Increase FAME II timelines As FAME 2 timelines have been increased to 2024, the move has really supported industry efforts and intention. Considering the size of transition taking place in the mobility landscape, it will do well for the sector if the timelines are increased to further two more years up to 2026. Simultaneously, a lease of strategic investment into the sector will benefit the industry. Upgrade charging infrastructure EV mobility and the battery ecosystem needs an extensive network of charging infrastructure. Public investment in charging infrastructure will make the shift to electric vehicles viable. Make PLI schemes viable for small and mid-scale organizations The PLI scheme has been a hit for certain players. However, due to extensive selection criteria, many small and mid-sized organizations who are into manufacturing EV batteries and auto parts are unable to apply for the scheme benefits. The smaller players are crucial to fill the demand-supply gap for the sector. Therefore, modifying the current guidelines or introducing a new alternative to make the scheme a viable option for these organizations will boost the EV ecosystem, increase competition in the market, promote sectoral growth, and significantly reduce the cost of final product. Increase India’s control over rare minerals, raw materials EV batteries are made of precious rare materials like manganese, cobalt, nickel, lithium, and so on. These minerals are concentrated only in some countries which are under the strong control of our largest trading partner. There needs to be an increased budgetary provision and drawing of a thought-out roadmap for India to be more Atmanirbhar in controlling these mineral reserves. The growth of e-mobility should be complemented with green electricity. India has done tremendously well on its solar and renewable energy projects, which have received worldwide recognition. However, while we have 38.4 percent of the power generated through renewable sources, 59.9 percent of electricity production is dependent on fossil fuels. In the next decade, a significant percentage of the energy consumed by the transport sector will shift to electricity. Therefore, for the sectoral growth to continue, power generation has to increase by an equivalent proportion, and if e-mobility has to truly be environmentally friendly, then the electricity generated has to be from solar and other renewable sources. As power generation directly impacts the e-mobility segment, constructive policy-making and public investments in boosting power generation infrastructure and mitigating challenges with discoms will indirectly benefit the e-mobility sector. While the sector is in its early years of growth, this year’s Budget can ensure that Indian electric mobility capitalizes on the current momentum for the next few years. The writer is Founder and CEO, Trontek. Views are personal. Read all the Latest News , Trending News ,  Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.