Budget 2019-20: Most of the EV manufacturers are very keen on the government helping them out with grants in the case of a start-up or giving subsidies for faster adoption.
Budget 2019 India: It is the budget 2019 season and it is pretty obvious that manufacturers are sitting with bated breaths. After all, more often than not manufacturers plan their investments and future product lines based on the Union Budget. While every time, manufacturers are more often than happy to send in their pre-budget expectations, this time around things are different. Most of the manufacturers we contacted, were hesitant to send in their reactions. Few even told us that they will send post-budget reactions. Other flatly refused to send in any comments. We have put down the reactions from the two-wheeler auto industry on what they largely feel the government should do for them.
Tarun Mehta, the CEO and co-founder of Ather Energy said, ‘The Central government has been consistently supporting and promoting the adoption of electric vehicles and it has had a positive impact on the market. As the industry matures, it will need long term policy support and predictability, which will allow OEMs and ancillary players to make deep investments. We expect the budget this year to focus on 4 areas of concern, that will have an impact across the short to long term growth of the electric vehicle industry in India’.
‘As a manufacturer, we would like the Centre to review the current taxation framework applicable on raw material and the final product. There is an inherent inverted duty structure as the GST input on raw material and other overheads are on average of 18 % wherein the output is pegged at 12%. The proposed reduction of the GST on EVs to 5% will increase this delta. This structure results in significant working capital blockage. Even with the existing GST inverted duty refund framework in place, there is a working capital blockage on the overheads and capital investments. A comprehensive GST refund structure of electric vehicle manufacturers or a reduced GST liability on the raw material should be assessed for seamless cash flows in the long run’.
‘For end consumers, the FAME 2 incentive distribution to individuals is limited to only one vehicle per category but in a country where most households own multiple two-wheelers, this will limit adoption especially if all two-wheelers are to go electric by 2025’.
‘Under the Phased Manufacturing Project, the timeline to source indigenous electric motors has been set as April 2020. This will need to be extended by 6-9 months to account for the validation and certification of the components and the vehicles, Similarly, the timeline to localise lithium-ion cells by April 2021 will not be sufficient for manufacturers to scale to meet demand and should be extended to 2023’.
The electric two-wheeler start-up company’s co-founder and operations head, Ankit Khatry said, “Higher subsidy for electric vehicles without any cap on the price of the vehicle. Green tax on petrol and diesel vehicle should be applicable. Government VC fund for funding EV startups should be made available.”
Rajiv Kapur, MD of Steelbird Helmets said, “India has a vast population of 1.3 billion, therefore, India cannot survive with agriculture and service industry alone. We need to become an industrial hub. And to become an industrial hub the government should give a lot of benefits, subsidies and incentives to the industries based on all labour intensive units. Also to overcome the current problem of Chinese products flooding the Indian market we need to ensure that we start manufacturing locally. And this is exactly what the superpower countries are doing where India is lacking.
Furthermore, for each and every district the government should announce schemes so that every district can become a city. For that any plant which a particular company sets up in a district there should be no GST or income tax and they can also claim the GST input. This will facilitate a double benefit. By claiming the GST input they can take credit, there will be no GST on the products and no income tax for a period of 10 years.
Moreover, there should be slabs. For example, if a company has over 1000 employees recruited then they should get 20% rebate in GST and income tax. Likewise above 2000 there should be a rebate of 40%, for over 3000 it should be 60%, above 4000 it should be kept 80% and for above 5000 the rebate should be 100 %. This will help uplift all the rural areas and help them come at par with the metropolitan cities. It will make our country a manufacturing hub and bring down the crime rate as every individual will become productive.
As far as the helmet industry is concerned, GST shall not be levied on helmets as they are meant for safety. Helmets are life-saving device just like medicines. Therefore, just the way there is no GST on medicines so shall helmets be exempted.
Moreover, unless helmets are exempted from taxes, prices will go up and the effort of the government to roll out the new ISI standard and mandatory use of ISI helmets will be defeated.
Therefore, helmets should not be treated like other commodities. Every day approximately 13 people die in road accidents. Many of these deaths happen because of no or poor quality of helmets. In a country where people consider helmets as a financial burden, a zero per cent GST will help to win people’s faith in good quality helmets and will induce them to buy and understand its significance.”
Lohia Auto Industries
Ayush Lohia, CEO of Lohia Auto Industries said “It will be good if the new government brings down the GST slab on electronic vehicles to 0-5 per cent. Moreover, in coming times government should encourage the sales by offering subsidies etc. so that demand for these vehicles goes up significantly and the plan should also be to make EV’s economically viable on its own. Also with the applicable rates for GST customer will gain comprehensive benefit. In addition to control of the traders needs to be increased as they are the ones who distress the image of the industry due to the poor service offered by them.
The industry is hopeful that the new government will take into consideration electric two-wheelers and three-wheelers powered by conventional lead-acid batteries and that it will be eligible for claiming subsidy under the second phase of FAME-2 as to give it a sales boost, consumer experience and help build a customer base.
The industry is hoping that the new government will create an optimistic milieu for environmentally friendly technologies as they are focused on reducing greenhouse gas emissions and carbon footprint.”
Parveen Kharb, CEO and Co-Founder, 22KYMCO said “We expect a level playing field with a focus on futuristic technologies, wherein the EV industry can truly keep pace with the rest of the world for the adoption of latest technology-based solutions that are meaningful to the cause of Indian commuters and environment. The government should incentivise and promote practical EV solutions and the charging infrastructure, which is essential for the EV eco-system to succeed. Incentives on capital investment for charging networks across cities and battery subscription programmes can fetch faster adoption of EV which is in line with the government’s vision.”
Rahul Sharma, Founder and Chief Revolutionary Officer, Revolt Intellicorp Pvt. Ltd said “The wave is not far away when consumers will adopt to EVs, and the government’s commitment towards electric vehicles is a positive sign for the auto industry. As a new entrant to the market, we need the government to review the current taxation framework and simplify the inverted GST structure as the input on raw material is at 18% wherein the output is at 12%. This will lead to significant working capital blockage. The proposed reduction of the GST on EVs to 5% will be beneficial if implemented. We expect the government to assess and reduce import duties on lithium-ion cells to further improve the industry’s cost issues at least in a phased manner for the next 5 years till we are self-reliant in building the critical components of an EV here in India.”
Ravinder Singh, Senior Vice President, Strategy and Planning, Yamaha Motor India Sales Pvt. Ltd. said, “With the automotive industry going through a tough phase, a boost from the government can help revive the sector significantly. The aim should be to shift the emphasis on drive consumption and boosting the demand in the overall economies. The need for Government’s support on some relief on GST from 28% to 18% will be beneficial, as the cost for producing BS VI vehicle is going to be higher. Expecting the government to also lay down the policy framework
for EV adoption and the phase-wise implementation plan.”