Budget 2023-24 Expectation: EV industry aspires reduction in GST, extension of FAME II subsidy

Envision a world where Indian streets are filled with the tranquil noise of electric vehicles running on clean energy. This is not an unrealistic dream, the Indian electric vehicle industry is rapidly advancing, sustained by a robust blend of government incentives and increasing interest from consumers. As the country prepares for its upcoming budget, the industry expects more support from the government to maintain this environmental advancement. Here’s what the industry expects from the government: Expecting reduction in GST from 18 per cent to 5 per cent The industry is expecting a reduction in the GST on lithium-ion battery packs and cells from 18 per cent to 5 per cent. If this change were to take place, it would have a positive impact on the Indian electric vehicle (EV) industry, which heavily relies on batteries. The lower GST rate would make it less expensive for manufacturers to produce EVs, making them more affordable for consumers. This reduction in GST is expected to help the Government’s plan to make India a leader in the electric mobility market. This step can also bring down the cost of electric vehicles which will help to increase the adoption of Electric vehicles in the country, hence it will create more jobs, increase revenue, and help to achieve the goal of sustainable transportation. Supporting carbon credits To achieve this, the industry hopes the government can support carbon credits by implementing policies encouraging companies to reduce their carbon emissions. With a cap-and-trade system, companies that emit less than the government’s limit can trade or sell the excess credits to companies that need to meet their limit. Therefore, businesses are rewarded financially for investing in clean energy technologies and reducing their carbon footprints. Investing in renewable energy projects such as solar or wind power will also provide companies with carbon credits, which will contribute to the growth of the electric vehicle industry as a whole. This will enable companies to comply with government regulations and achieve their emission reduction goals by using these carbon credits to offset their own carbon emissions. Extending the FAME II subsidy program The FAME II subsidy program provides incentives for the purchase of Electric vehicles and it has been successful in pushing EV adoption in India. With the program set to expire in March 2024, the industry is urging for its extension to continue the support for the EV industry and to make Electric vehicles more affordable and accessible for consumers. An extension of the program would help to ensure that EVs remain affordable and accessible to consumers, and would be an important step in achieving the government’s goal of having 30% of all vehicles on Indian roads to be electric by 2030. Standardising policy for battery swapping Currently, the battery swapping market is fragmented, with various players using different types of batteries for various types of vehicles. This can result in difficulties in finding compatible charging infrastructure and ports. Additionally, there have been instances of fires at battery swapping stations as a result of the use of inferior batteries. By standardising policy, the government will be able to prevent such incidents by specifying the type of battery pack, cell, dimensions, as well as connectors that should be used to prevent such incidents. By doing so, we will be able to ensure interoperability across the country and improve the safety and reliability of the battery-swapping service. Implementing PLI In view of the government’s implementation of a similar incentive scheme for cell manufacturing, it may be advantageous to implement a PLI scheme for battery pack manufacturing as well. In spite of this, battery packs and cells are very different components with separate manufacturing processes and supply chains. It is important to recognise that cell manufacture plays a key role in battery pack manufacturing; however, it is insufficient on its own to meet the anticipated demand for electric vehicles. To ensure sufficient capacity is available to satisfy the projected demand for EV batteries, it would be necessary to implement a PLI scheme specifically geared toward battery pack manufacturing. The government can also reduce costs for electric vehicle manufacturers by promoting domestic battery manufacturing, thus making electric vehicles more affordable for consumers. Battery packs are the most expensive component of an electric vehicle. Overall, the EV industry in India has made significant progress in recent years, but there are still several challenges that need to be addressed. The upcoming budget is an opportunity for the government to take further steps to support the growth of the industry and make electric vehicles more accessible to Indian consumers. The author is the Co- Founder of Neuron Energy. Views expressed 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.