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Interim Budget 2019: Electric Vehicle Industry Seeks Cuts In GST, More Customer Incentives, And Stable Policies

From the upcoming budget, the electric vehicle industry is expecting major policy announcements to encourage faster adoption of electric mobility for accomplishing India’s vision of 30 per cent of vehicles on road to become electric by 2030

Interim Budget 2019: Electric Vehicle Industry Seeks Cuts In GST, More Customer Incentives, And Stable Policies

New Delhi: From the Interim Budget 2019, India’s budding electric vehicle (EV) industry is hoping for major policy announcements and sops to achieve the government’s target of 30 per cent vehicles on road to be electric by 2030. The industry is hopeful that the government may lower the Goods and Service Tax (GST) on all the electric vehicles from the current 12 per cent to make EVs affordable and to ensure faster adoption of greener mobility. For increasing the manufacturing of the electric vehicles, there may be a cut in tax on EV components like batteries, motors, and controllers as well, for example, the GST on EV batteries may be reduced from the current 18 per cent. The industry expects that GST on all services related to charging (slow charging, fast charging, battery swapping) will be kept at 5%.

Also Read: Take Cue People! Actor Gul Panag Celebrates Four Years Of Her Electric Vehicle Journey, Says There Is No Going Back

Priyank Agarwal of Exicom, a Gurgaon based firm that makes batteries for EVs and provides charging solutions said,

Government has done a lot to give a push to electric mobility in India. What we expect from this budget is an announcement of a reduction in GST on batteries. We are currently paying 18% GST on the battery that we sell to the vehicle manufacturer who pays 12% GST on the battery fitted vehicle which he sells to the customer. So there is a 6 per cent GST differential. Our biggest ask for the government is that if the EVs are being encouraged by levying a 12 per cent GST then its components should also be charged at 12 per cent GST.

In addition, with its objective of lowering the emission levels in the country, the industry is expecting that the government may also reduce the current GST of 28 per cent on the hybrid vehicles.

Stable And Long Term Policy Support:

The EV industry has unanimously urged the government to build a stable and long-term policy framework for a smooth transition of Indian mobility from pollution to less/non-pollution. Society of Manufacturers of Electric Vehicles (SMEV), the nodal body of electric vehicle manufacturers in India said that there is a need of strong hand holding from the government.

Sohinder Gill, CEO of Hero Electric and Director of SMEV said,

Policy intervention needs to be committed for at least five years as lack of stability in government policy becomes a deterrent for the industry to make long term investment which impacts the growth of the industry.

Tarun Mehta, Co-founder & CEO of Ather, an electric scooter manufacturer based in Bangaluru and charging facility provider also reiterated SMEVs expectations and said,

Any policy intervention needs to be committed for 3-5 years. A lack of predictability in government policy becomes a deterrent for the industry to make long term investments, which impacts the growth of the industry.

According to Mr. Gill, to increase the indigenous supply of critical components for manufacturing EVs and to make EVs more affordable, there needs to be more vehicles in the market and the government can play a huge role in ensuring this. He further said that the government must give more thrust on electric mobility under its smart city project which is currently missing.

Also Read: External Affairs Minister Sushma Swaraj Gives E-Rickshaws To Senegal Ambassador To Promote Clean Energy

Incentives For End Consumers:

The industry is expecting rebates in tax for people adopting electric vehicles like Norway, and France which have already implemented electric vehicles in their respective systems. Other incentives like increased subsidies for people buying new EVs, dedicated lanes for the electric vehicles, and zero roads and toll tax should also be announced.

Naga Satyam N. Executive Director of Olectra-BYD that launched an electric bus last year in Delhi for trials said,

Incentivising EV and making e-mobility more affordable is the only way to make it attractive to the people who are currently more than happy with their high range high power fuel engine vehicles.

Encouraging Indigenous EV Technology:  

According to Mr. Mehta, the only way to make EVs affordable for people is to produce it entirely in the country. For encouraging local production of EVs indigenously, he said that import tariffs on the components of EVs need to be re-examined. He asserted,

We would like to see reduced import duties on lithium-ion cells, motors, and motor controllers. To encourage Make in India, we would recommend an increase in import duty for fully assembled battery packs, since there are local options available in India.

Akshay Singhal, Founder, Log 9 Material, an IIT-Roorkee venture which is working on producing lightweight batteries for EVs said, “The adoption of electric mobility in India has been slow due to high costs of vehicles. This high cost is primarily driven by imports of technology and components for these vehicles. ”  He further said that in order to build an ecosystem for EVs in India, the technology needs to be made affordable for the Indian OEMs (Original Equipment Manufacturers) while focusing on gradually improving indigenous technologies. For this the government should allocate funds for research on Aluminium-air battery which not only gives a long driving range without the need for huge charging infrastructure.  Being the third largest producer of Aluminium in the world, this technology may prove to be apt for India.

Other players in the EV Industry also said that the current Lithium Ion technology for electric vehicles is a disadvantage for India as it does not have any reserves of Lithium. So in the bid to reduce its dependence on imports for petroleum, India may be headed towards dependence on other nations for Lithium in the future.

Also Read: India Is Playing A Leading Role In Driving Down Global Emissions, Says UN Environment Head Erik Solheim

Encouraging PPP Model For Sharing Services: 

To help the industry grow, SMEV suggested that the government should set up a framework to encourage PPP (Public Private Partnership) model in EV (cars, motorbikes, and scooter) sharing services through which the required infrastructure support can be provided.

Mr. Satyam said,

The government is making it mandatory for the public offices to adopt e-mobility, ministries are adopting e-mobility to cut pollution. I think the efforts to increase EVs can be augmented if the private sector could pitch in too. From the upcoming budget, I expect that e-mobility will be made a mandate for the CSR (Corporate Social Responsibility) portfolio of the corporates as most companies have employee pick-up and drop facility.

SMEV has also urged the government to target at least one million EVs in the 10 most polluted cities. Since the government is emphasising on adoption of EVs, the industry also expects an announcement of green cess on all fossil fuel combustion engine vehicles. This will make the electric vehicle more attractive for the end users which will ensure faster adoption and maximum implementation of India’s EV mission.

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