What? EVs are going to be cheaper!!
Electric Vehicle Industry experts anticipated that several measures might be taken when the Govt of India presented the Union Budget to drive the Electric Vehicle industry forward. Some were seeking GST minimization, while others were looking for implementation of FAME III (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles).
In her recent budget speech, Finance Minister Nirmala Sitharaman announced essential decisions for the Electric Vehicle (EV) Industry. As the EV industry is experiencing remarkable growth, continued backing from the Indian government will be required to sustain this growth pace.
As per Mrs Sitharaman’s announcement, import duties on crucial minerals like lithium will be waived. This will directly impact the cost of batteries, which are a very important and expensive component of an EV car. Thus reduced cost of a battery will enable EV manufacturers to reduce the price of an EV to pass on this benefit to consumers.
Let’s see what more Mrs Sitaraman announced in Budget 2024 for EVs and how it will impact the EV industry.
Budget 2024 - Is the EV Industry Favored?
Although EVs are booming in India, the industry is set back due to insufficient charging infrastructure and higher battery costs. Under the EMPS—Electric Mobility Promotion Scheme (EMPS), which ends on 31 July 2024, two- and three-wheeler EV purchasers will get subsidies. This scheme of MHI (Ministry of Heavy Industries) aims to improve the adoption of EVs in India.
Even the third scheme of Faster Adoption and Manufacturing of Electric Vehicles (FAME-III) is likely to be implemented soon. Whenever it’s launched, both past and new companies must submit new certifications as per the updated guidelines. This process is crucial to receiving government incentives for EV sales.
Before the Budget 2024 was passed, Madhumita Agrawal (CEO & Founder of Oben Electric) highlighted that it would be great if the budget addressed the disparity in GST on EVs and other materials used to manufacture them. It will provide cost benefits to the manufacturers as well as consumers.
Akash Gupta (CEO and Co-founder of Zypp Electric) raised the same issue: to improve EV adoption in India, the GST should be reduced from 18% to 5%.
By keeping these matters in mind, Nirmala Sitharama completely exempted custom duties on Lithium- a key component for EV battery manufacturing, along with cobalt, copper, and rare earth elements.
In this announcement, Dr. Amitabh Saran (Founder and CEO of Altigreen) stated that Union Budget 2024 has waived the import duties on 25 minerals, like Lithium. This will incentivise the battery manufacturing industry and reduce battery manufacturing costs. Ultimately, it will make EVs more economical for buyers.
He also added, “We were expecting the government to bring down the GST on all EV components to 5%, including lithium-ion batteries and spare parts. A reduction would make EVs more affordable and lead to higher adoption rates.”
Additionally, Samarth Kholkar (CEO & Co-Founder of BLive) noted that the measures taken in Budget 2024 will support greater EV adoption in India. It is estimated that the growth in EV sales could be as high as 30-35% by 2030.
Conclusion
Budget 2024 certainly benefited India’s EV industry to a certain extent. There are some good takeaways with further room for improvement. The India EV story is going to change the landscape of this sector and measures like this are pleasantly welcome. The high growth of the EV market will also bring technological advancement like the Aevirt App. Aevirt is a one stop solution for the EV owners as well as Charging Stations. Our state of the art technology seamlessly connects both for an electrifying experience. Join 1000+ members of the Aevirt family. Download the App from Playstore or Appstore. For more industry insights, stay tuned with us, Happy reading!
