Budget 2021 expectations (EV industry): Charging infrastructure, localisation, financing & incentives

Union Budget 2021 expectations: From better financing for EVs to quicker expansion of charging infrastructure to the circulation of information on benefits of the PLI Scheme for the automotive sector, here's what the EV industry expects.

By:Updated: Jan 22, 2021 4:19 PM

We’re into a new year and so the system needs to gear up for a new financial year. Plans and proceedings for the rest of the year will depend a lot upon the budget decided upon by the government for various industries. As the day of the final announcement on 1st February draws closer, we got in touch with some players in the electric vehicle industry in India to learn about what the startups and manufacturers hope for in the coming Union Budget 2021. From better financing for EVs to quicker expansion of EV charging infrastructure to the circulation of information about the benefit of the PLI Scheme for the automotive sector, here’s what the industry expects:

Suhas Rajkumar, Founder, Simple Energy:

“The year 2020 was a never-seen-before scenario. We did see the GDP contract as the whole world was at a pause. Amidst the pandemic, a lot is expected from the Government in terms of the support they can give to the auto industry. EV manufacturers would certainly hope for few policy changes, ease of finance, and reduction of GST slabs from the upcoming Union Budget. These costs eventually increase the cost of manufacturing and of owning the EV, which again slows down its adaption. Undoubtedly, the government has shown its support with various initiatives to boost the usage and adaption of EV like the National Electric Mobility Mission plan 2020, capital subsidies under FAME, etc to name a few, and we’re expecting them to take more supportive steps on the policy framework which will help the EV sector in long term.”

Deepak MV, Co-Founder & CEO, Etrio:

“The main key expectations from Budget 2021 that we have is the enablement of charging infrastructure in the country at a faster rate. Also, more details and information on the PLI scheme to support for localization of the EV supply chain in the country to enable innovation should be circulated. The government should incorporate an attractive financing option for electric vehicles and a faster roll-out of tax refunds and incentives should be implemented. A smoother regulatory approval system will also boost the sector. We also hope that the Budget addresses the inclusion of retro fitment incentives in FAME II policy.”

Saurav Kumar, Founder and CEO, Euler Motors:

Reducing custom duty on imports of lithium-ion battery cells and exempting electric vehicles from GST will help bring down the price parity to make EVs affordable. Financing is also a concern for the uptake of electric vehicles. The government should priorities the loan schemes to make it more attractive for consumers, especially in commercial segments. There needs to be a clear direction with new financing for banks and NBFCs schemes to facilitate easy financing of electric vehicles for the buyers.

The Government needs to bring back its focus on establishing fabrication units. From a localization and Atmanirbhar perspective, these units will be key to support low-cost manufacturing of electronic components, batteries, and power electronics for EVs. Moreover, the latest incentives under the PLI scheme are set to spur lithium-ion cell manufacturing in India and the role of fabrication units would be incremental to make this happen. We expect the Government to introduce concrete measures that support this outlay and kickstart the production of lithium-ion cells in India.

Dr Irfan Khan, Founder and CEO of eBikeGo:

“The auto industry was hit by the novel Covid-19 in 2020 and a lot of companies struggled to cope up. The automotive industry has fought back valiantly and vehicle sale numbers in the latter half of the year are a promise of greater times to come. The auto industry especially the EV sector expects relief from the Union Budget 2021-22 in multiple areas including direct and indirect taxation. The government should include a reduction of GST rates on vehicles and measures to improve the disposable income of the salaried class.

“The government should consider expanding the availability of tax deduction of interest on the loan for EVs to other vehicles. The government and the GST council should make EV cheaper by temporarily reducing the GST rate to 18% from the present 28% and reducing the compensation cess rates. Removal of restrictions to avail the input tax credit of GST paid on automobiles for businesses would make automobiles cheaper when used for business purposes, besides fulfilling the basic intention of GST to eliminate cascading of taxes. This move can have a positive impact in these difficult times.”

Also read: 2021 Union Budget expectations: Railways expecting higher loading from car/bike industry

Jeetender Sharma, Founder & Managing Director, Okinawa Autotech:

“We urge the finance minister to reconsider the current taxation framework applicable to raw material and the final product in the case of EVs. While the GST input on raw material is 18%, the tax on outward supplies currently stands at 5%, leading to an implicit inverted duty structure for us (manufacturers). This move could help in optimizing the cash flows.”

“The central government’s recent move to extend the PLI scheme to the automobile sector including for manufacturing of Advanced Chemistry Cells (ACC) is commendable. While this will definitely give a boost to local manufacturing, better yet, the government must also look at aggravating the domestic demand by further incentivising individual and commercial consumption of EV pan India.”

Harsh Vardhan Didwania, Co-Founder and Director, EeVe India:

“Measures that would augur well for the EV industry in the upcoming budget would be to tackle the high GST cost of raw material and custom duty & encouraging the production of Lithium powered batteries in India which constitutes almost 40% cost of the vehicle. We also look forward to making retail finance available through Nationalised and Private Bank by including the EV in priority sector lending.”

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