Budget 2020 Expectations: EV manufacturers ask for abolishing customs duty on li-ion cells

By: |
Updated: January 27, 2020 4:33:14 PM

Budget 2020-21: About 40-45 percent of the cost of an electric vehicle is attributed to the battery pack and hence the industry expects that the customs duty of 5 percent on lithium-ion cells to be abolished.

Budget 2020, Union Budget 2020 India, Budget 2020 India, Budget 2020-21Union Budget 2020 India (Image for representational purposes only)

Union Budget 2020 India: The 2020 Budget announcement is now only about four days away and industries are expecting good things in the form of financial relief or support from the government. The automobile industry had a rough year in 2019 registering the worst sales slowdown of the decade owing to reasons like low consumer sentiment and the upcoming BS-VI transition as well. The electric vehicle industry is, like around the world, new in India and hopes for policies that provide a boost to quicker EV adoption in the country which aims to have about 30% of all its vehicles on the road electric by 2032.

Lohia Auto – Ayush Lohia, CEO

Lohia Auto is pinning positive hopes on 2020 budget to create an optimistic environment for Electric Vehicle Industry, in the upcoming budget, Ayush Lohia expects the government to ensure that they instruct the retail banks to provide finance for electric vehicles, perhaps at a lower rate than ICE units. Moreover, he wants the government to refund the GST from whatever components the auto companies are currently purchasing. Ayush expects the electric two-wheeler industry to boom in the near future.

ION Energy – Akhil Aryan, Co-Founder and CEO

To accelerate the all-electric transition, the EV industry needs a combination of short and long-term policies, which include:

Helping manufacturers reduce lithium-ion cell production costs: Currently, Li-ion batteries amount to 45% cost in EVs which means that the cost of an EV is directly proportional to the cost of its batteries. We strongly support SIAM in suggesting the government to abolish the customs duty of 5 percent on li-ion cells. It is imperative to incentivize local manufacturing of lithium-ion battery cells which can further enable battery packs to be manufactured and assembled locally, reducing import costs.

Promoting the EV ecosystem and adoption: Offering incentives and reducing the upfront cost of installing charging stations, battery swapping stations and facilitate land acquisitions to support the creation of EV charging infrastructure.

Poor infrastructure, low speed and unaffordable have been the key challenges hindering EV adoption in the country. Localization of EV components, improved availability of battery technology and extensive charging infrastructure setup can reduce the overall cost of EVs, making them viable for shared mobility as well as for personal use.

Facilitate the development of ancillary industries: A notable reduction in the overall cost of production of batteries for various components that go into a battery can help reduce the cost of the EV and aid in a faster adoption in the country.

Micelio – Shreyas Shibulal, Founder & Director

“The need of the hour is a budget that focuses on creating an EV ecosystem through make in India – both in EVs and battery manufacturing, for long term sustainability and reduction in cost. There should be substantial budget allocation towards EV charging infrastructure. The government should have policies that facilitate incentives for EV owners in commercial and public space. It would also be great if we further encourage foreign investment by reducing GST charges for their investments in the EV startup space.”

Okinawa Autotech Pvt Ltd – Jeetender Sharma, Founder & MD

“The revival of the automobile industry is expected to be on the priority list in the upcoming Budget session. Low market sentiment and the transition to BS-VI emission standards were said to be the prime reasons for the industry slowdown last year. The industry is hopeful that the government will announce policies to support the industry and increase the demand in the market.

“Another buzzing word is about the growth of the electric vehicle segment in India. EV revolution has certainly picked up well in India. The government has also fuelled the market with subsidies and incentives to accelerate adoption. However, the cost of components and import duty remains a big concern for EV manufacturers. Certain parts of products are still imported, due to lack of manufacturing facilities, and this forms a major part of the overall product cost.”

Budget 2020 expectations from two-wheeler industry: ‘Reviving rural economy can help tackle current slowdown’

Evolet- Rissala Electric Motors Pvt Ltd – Prerana Chaturvedi, CEO & ED

“The long-term benefits of EVs are multi-fold still the relatively higher cost of acquisition of an EV is a bottleneck in its adoption. Unarguably, lowering the GST on electric vehicles from 12% to 5% has benefited electric vehicle manufacturers. However, GST on raw materials is still a concern for manufacturers in addition to the import duty on technologies for e-drivetrain and other EV related products. The government needs to do more to support the localization of battery technology that power electric vehicles. Lithium-Ion Batteries that form close to 40% of the cost of an electric vehicle attract GST of 18%.

Do you know What is Finance Bill, Short Term Capital Gains Tax, Fiscal Policy in India, Section 80C of Income Tax Act 1961, Expenditure Budget? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Next Stories
1Budget 2020: How MSMEs, startups can drive inclusive economic growth by digitization
2Budget 2020: Not just changes in tax slabs, Modi govt may unveil amnesty scheme for taxpayers
3Budget 2020: Govt must bring this new scheme to unclog tax revenues, help taxpayers settle tax disputes