Budget 2023: Repreive on GST and support for EV ecosystem key expectations for Auto Inc | The Financial Express

Budget 2023: Repreive on GST and support for EV ecosystem key expectations for Auto Inc

Key auto industry stakeholders believe that measures to support EV adoption would be crucial going forward and expect continuation of incentives. There is also focus on potential relief on the GST levied on EV parts like lithium-ion batteries and ancillaries.

electric vehicle

The buzz around Budget continues to gain momentum as the countdown for February 1 gathers pace. Here is a quick look at what Auto Inc is expecting in the Budget given the recent flurry of activities and policy push towards clean and sustainable mobility-

Satyakam Arya, MD, Daimler India Commercial Vehicles anticipates “FY2023 to be an inflection point for India, in spite of the pandemic and supply chain challenges over the past 2-3 years, India has demonstrated incredible resilience and a hunger for growth. Rapid development of urban and rural infrastructure is expected to give a major boost to the overall economy, consumption of raw materials like steel and cement is expected to be strong and as a result this would increase demand for heavy-duty trucks. Rural demand is expected to be strong and resilient.We are also expecting that more sectors would be brought under the PLI umbrella scheme. Supply chain issues over the past years was a big learning and an even bigger opportunity for India to stand up to the challenge and become the supplier to the world. With many Free-Trade-Agreements on the cards, India’s push towards exports would be a welcome opportunity.”

Prashanth Doreswamy, President and CEO – Continental India believes that “A reprieve on Goods and Service Tax (GST) will come as a welcome move. The focus over the last year has been on efficiently implementing clean and green mobility, and I hope there to be a relief on the GST levied on EV parts like lithium-ion batteries and ancillaries. I also look forward to the government extending the PLI scheme (Production Linked Incentive) for auto and auto component manufacturers, particularly for organizations focused on exports. In addition, there has been a zealous case made for FAME II to be extended beyond 2024, a decision, if made, will prove highly beneficial for the industry.”

Warren Harris, Managing Director and CEO, Tata Technologies said, “our expectation from the Union budget extends across Automotive, Aerospace, Manufacturing and IT sectors. We commend the initiatives that have already been undertaken by the government for promoting EV manufacturing in India, which has encouraged us to utilise our product engineering capabilities to help our customers develop great EV products for India as well as global markets. We hope that the government will continue supporting the EV adoption program while encouraging the adoption of next-gen technology such as Artificial Intelligence, Data Analytics, Industry 4.0, Cloud Computing and Robotics, which will enable the Manufacturing enterprises of tomorrow.”

Mahesh Babu, CEO, Switch Mobility said, “India is making an intense push for faster adoption of electric buses, and the segment has seen exponential growth over the years. Given this scenario, one of the key expectations from the budget is the continuation of FAME subsidy, for at least few years and a reasonable EV penetration in the commercial vehicle segment. In order to democratise sustainable mobility, priority and access to funds, with payment guarantee by STU’s is a pragmatic solution for EV bus adoption. Hence, we hope to see measures, aimed at supporting financing and funding of electric public transportation projects, as the bankability of the contract is seen as high risk. The government’s support through priority lending would also help meet the aggregated demand. We hope the government continues its thrust on infrastructure and drives us forward on the path to higher growth.”

Sanjeev Vasdev, MD, Flash stated, “The Indian automotive landscape is growing from strength to strength, with the auto components market playing a pivotal role in the progression. While the industry is witnessing a paradigm shift towards electric mobility, the auto components industry is witnessing a disruptive phase due to these novel advancements. One of the key expectations from the budget is the reduction in the GST rate, from 28% to 18%. It will greatly support the home-grown players to invest in newer technologies for enhanced mobility offerings, even at the global level. While, the government has been supporting the automotive industry through various schemes and incentives, the change in GST will offer huge assistance and boost to the fast-growing market.”

Aakash Minda, Executive Director, Minda Corporation hopes that Budget 2023 supports both manufacturing sector and the consumer. He says to build an upward tick within the EV market, the government schemes should strengthen the indigenous EV industry. The focus must be on providing incentives and schemes to aggressively build a robust ecosystem that supports the infrastructure, supply chains and material required for growth. This will ensure India’s participation in contributing to EV revolution in Indian as well across global markets.

“We urge the government to consider incentivising the journey of ‘electronification’ by rationalising the GST rate for auto components. While EVs are priced with a 5% GST, component manufacturers are currently mandated to pay GST of 18% to 28%. We are hoping for a tax standardisation that will help the component manufacturers scale up and strengthen to provide parts and consistent quality and reduce litigations. We are excited to see how the budget will supplement the Faster Adoption of Manufacturing of Electric Vehicles Scheme – II (FAME-II). With its budgetary outlay of Rs 10,000 crore, it is currently only effective till March 2024. We are keen to see the how the budget unfolds for the automotive sector. Further, the auto component industry keenly awaits further additions to Advanced Automotive Products (AAP) list under PLI scheme covering connection systems for BS VI and EV products, Antennas, Driver Information Clusters and Sensors,” added Minda.

Hitesh Garg, India Country Manager, NXP Semiconductors adds, “With its exceptional growth, the EV industry is expected to create millions of direct and indirect jobs over the course of the next few years. The faster adoption and manufacturing of Hybrid and Electric Vehicles (FAME)-II is currently slated to expire on March 31, 2024. We expect the government to continue with the effective measures to encourage the faster adoption and manufacturing of electric vehicles in India.”

Atul Bansal, CFO, Yokohama Off-Highway Tires said, “As we come to the budget, we are looking at certain things in the Tyre Industry like, we would like remission of duties and taxes with relation to exports to apply both to SEZ and EOU. Second is, Production Linked Incentive Scheme to be introduced for tyres as we see big opportunity over there for the growth.”

Aditya Munjal, Director, Hero Cycles says. “we are hoping for the inclusion of cycles and e-cycles in the existing schemes and policies such as PLI and FAME-II, that would help transform the bicycle industry in the country. There is a huge potential within India for the cycling industry and by taking adequate measures such as providing subsidies and lowering interest rates on the purchase of an e-cycle would help in increasing adoption, contributing to the socio-economic needs of the consumer. With severe supply chain disruptions globally; this is our opportunity to take the pole position in supplying e-cycles to the world.”

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First published on: 30-01-2023 at 17:34 IST