Budget 2018: Electric Vehicles ignored, contradicts government’s vision of 100% electric mobility by 2032

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Updated: Feb 01, 2018 6:11 PM

Budget 2018 was expected to bring in some good news for electric vehicles, given the government's focus on promoting electric mobility. However, this sector was given a miss by Arun Jaitley and here's what all could have been done and what the auto sector thinks about it

Arun Jaitley’s budget 2018 speech surprisingly had no mention on anything related to future of mobility and missed out giving any funds or incentives under FAME scheme to electric vehicles. Time and again Modi led Government has made its stance clear on electric mobility to reduce oil import bill and air-pollution. But the roadmap to achieve this target still remains unclear with no support from Government on paper. Lowering tax on EVs and electric components was an expected highlight for the auto Industry but remains unanswered. In addition, the finance minister did not revise the weighted deduction on Research & Development to 200% from the current 150%. This would have been a big boost for EV battery manufacturing and to control air-pollution as we shift towards BS-VI. But once again, nothing on this front.

Talking about the Budget 2018, Sohinder Gill, Director- Corporate Affairs, Society of Manufacturers of Electric Vehicles, “The only thing we were expecting from the budget was a rationalisation of GST rate i.e. currently 12% for EVs and 28% for EV batteries. Also, we had requested that GST should be made at least either 0 or 5% for initial years. But we didn’t find any mention of the same. Perhaps it will be covered in the policy, later. Overall we are happy with the outcome of the budget.”

He added further, saying that “As the EV Policy is not a part of the budget, we were not expecting any major announcement related to electric vehicles in today’s budget. However, we are happy to note that there are general announcements made today, which will support the cause. For example air pollution, higher excise duty for indigenization, increase in agriculture infrastructure spends as well as other announcements alike, which will, directly and indirectly, support the automobiles, especially two-wheelers, hence giving a further boost to EVs. We all know that the new EV policy is in the advance phase of formulation and it will be a separate policy which will come after a few months. It is expected that the policy will be stable in the long term, which will shape up the future of the electric vehicles.”

The Government of India has allocated of Rs 16,000 crore fund during FY 2018-19 for electrifying rural India and this, in the long run, will benefit the EV industry to develop an ecosystem that supports electric cars and vehicles. This, however, will only benefit electric mobility indirectly and over a long time period. Budget 2018 also saw customs duty on auto-components being increased by 5%. While this move supports Make-In-India campaign, key auto components required for the initial push of electric vehicles will also cost more, in turn, making it more difficult to promote electric vehicles in India in the immediate future.

 

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