Budget 2023: Green financing, positive policy initiatives can accelerate EV adoption for sustainable growth

With heavy investment from governments and the private sector the electric commercial vehicle (EV) industry has been gaining momentum in recent years. To tap its full potential requires continued policy and regulatory support. With a global move towards EVs in preference to ICE, it is critical that India makes that transition quickly to create a robust home and export market.

The upcoming Union Budget provides an opportunity to encourage the growth of the EV industry, especially when the government is targeting 30% electric mobility by 2030. While the government has taken several positive steps in this direction, it should consider some of the measures outlined below:

Increased funding for FAME

A key industry expectation from the Budget is increased funding for the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) scheme. The FAME scheme, which began in 2015, offers incentives for the purchase of electric and hybrid vehicles. However, in recent years, the allocation for the scheme has been insufficient. Increased funding would go a long way toward encouraging the adoption of EVs.

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The government should consider extending the subsidy benefits to commercial electric vehicles like buses, trucks, and auto-rickshaws. This could include the allocation of funds for the procurement of electric buses, taxis, and last-mile delivery vehicles. The ability of companies to fund electric bus tenders on their own balance sheets or those of their lenders will be limited. If the government is aiming to meet its target of 50,000 e-buses, we will need Rs 60,000-70,000 crores in funding. No company can take this on its own balance sheet.

Additionally, the industry expects the government to unveil measures that make it easier for commercial vehicle operators to transition to EVs. This could include lending and financial aid to small and medium-sized businesses, as well as regulations that mandate a specific percentage of commercial vehicles to be electric.

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Green Financing for last mile connectivity

There is also a need for a green financing mechanism for the introduction of electric buses and public transport in the country. We are looking forward to a reduction in GST slabs as well. Also, there should be some scheme where Government Receivables can be securitized so that private companies don’t become Non-Performing Assets because of overdue govt receivables. The metro systems will bring a big relief for most metro cities, including Mumbai. For these to be truly effective we need last-mile feeder connectivity with thousands of smaller electric buses that can be parked between metro pillars, with charging when not in use.

Encourage EV manufacturing

At present, most EV manufacturers import components and assemble them in India, raising the cost of the vehicles. Policies that support the establishment of local manufacturing facilities would lower the cost of EVs and create jobs in the country. The government should consider granting tax breaks and other incentives to companies that invest in the production of electric commercial vehicles in India.

Development of charging infrastructure

The development of the charging infrastructure for EVs needs urgent attention. The availability of charging stations is a major impediment to the mainstream adoption of EVs. The budget should allocate funds for the installation of charging stations around the country, particularly in remote areas. The government should also focus on offering tax benefits to companies who invest in R&D for electric commercial vehicles and subsidies to commercial fleet operators willing to transition to electric vehicles.

Battery storage and recycling

One of the major impediments to the widespread adoption of EVs is the high cost of batteries. The government should give incentives for the development of battery storage and recycling infrastructure, which will help in reducing battery costs and encourage the use of EVs/electric shared mobility options.

In India, the EV industry is still in its infancy and needs government assistance to grow. The Budget should prioritize incentives for EV purchases, local manufacturing, and the development of charging, battery storage, and recycling infrastructure. With the right policies in place, the EV industry can create jobs while decreasing dependence on fossil fuels. The government should seize this opportunity to offer the required impetus for the growth of India’s EV industry.

In conclusion, by increasing the allocation for the FAME scheme, promoting local manufacturing, developing the charging, battery storage, and recycling infrastructure, and providing subsidies for the commercial fleet operators who are willing to switch to electric vehicles, the government can provide the necessary push for the industry to grow and create job opportunities while reducing dependence on fossil fuels. It is high time for India to shift towards electric commercial vehicles not just to reduce its dependence on fossil fuels but also to combat the issue of air pollution and road congestion. The government should grab this opportunity to promote the growth of the EV industry in India.

The writer is Founder & Chairman, EKA Mobility & Pinnacle Industries Limited. He tweets @sudhirmehtapune. Views expressed are personal.

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