The electric vehicle industry is expected to be amongst the fastest growing segment in the automotive industry globally, and in India too the industry stakeholders are hoping to make the most of it.
In 2023, a total of 15,30,326 electric vehicles were registered across segments in India, compared to 10,25,134 units in 2022, which translates to a growth of 49.28 percent. This is a small fraction of the overall automotive sales, but definitely shows the acceptance amongst consumers of green technology.
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While various measures have been taken by the Central and State governments in the country like the introduction of FAME subsidy, state policies, setting up of EV charging ecosystem, rolling out of Production Linked Incentive (PLI) scheme, etc, the industry stakeholders are hoping to see some more steps from the government. Some of the expectations of industry captains include –
Naveen Munjal, MD, Hero Electric is hopeful to see a continued focus on long-term policy measures that promote EV adoption such as reduced GST rates, extension of FAME-II subsidies/introduction of FAME-III, and increased infrastructure spending for charging infrastructure. This will spark consumer confidence and will bridge the affordability gap. Additionally, promoting domestic battery manufacturing and skilling initiatives for the EV workforce will be vital for creating a robust and sustainable EV ecosystem in India.
Akshit Bansal, CEO & Founder, Statiq anticipates the government to align its policies with the net-zero goal and sustainable development. In particular, the implementation of Production-Linked Incentive (PLI) schemes tailored for EV charging companies is of utmost importance. The growth of EV infrastructure plays a pivotal role in driving widespread EV adoption in India, and financial incentives will undoubtedly accelerate the expansion of our charging network. Moreover, looking forward to tax reformation that not only supports our industry but also encourages consumers to embrace electric vehicles. Circular economy measures should also find a prominent place in the budget, promoting recycling, waste reduction, and the use of eco-friendly materials in manufacturing.
Dr Lalit Singh, CEO of TelioEV hopes for continued support in the form of demand-side incentives, such as tax deductions for purchasers of electric vehicles and an extension of FAME-II subsidies. The development of a resilient EV charging ecosystem is of equal importance, especially in Tier II and Tier III cities, we urge the government to allocate substantial funds for the development of charging infrastructure. The open data standards and APIs for charging networks should be prioritised in the budget as this will encourage interoperability and nurture a thriving software ecosystem by providing EV drivers with seamless access to any station, irrespective of the provider.
“Additionally, we seek fiscal incentives such as tax rebates to support investments in R&D for software solutions that enable advanced charging. This will encourage innovation in areas like smart grid integration, dynamic pricing, and demand forecasting will optimise energy use and enhance charging efficiency.”
Nikhil Bhatia, Co-Founder & Chief Strategy Officer, HOP Electric Mobility: “Advocating for a streamlined Production-Linked Incentive (PLI) scheme, stakeholders seek clarity in provisions to encourage investment and growth. The call extends to widening the scope of the FAME II scheme, fostering innovation in diverse EV segments. A crucial focus lies on incentivising in-bound technology transfer and manufacturing capabilities, positioning India as a global EV technology hub. Anticipating the central role of lithium-ion batteries, we urge GST reform for increased cost competitiveness. Moreover, the promotion of universal battery charging and swapping infrastructure aims to simplify the user experience and standardise EV charging. The forthcoming budget is anticipated to lay the foundation for a sustainable, technology-driven future in Indian mobility, aligning with global EV trends.”
Sameer Aggarwal, CEO & Founder, Revfin Services: “Investing in renewable energy infrastructure is not just an environmental imperative; it’s an economic opportunity that can power our nation forward. In the drive towards a greener tomorrow, the government can catalyse change by incentivising renewable energy projects and R&D initiatives. By allocating resources to enhance solar and wind power capacities, we not only reduce our carbon footprint but also fortify our energy security. Crucially, as the electric vehicle revolution gains momentum, integrating renewable energy into the national grid becomes paramount. A strategic allocation in the budget for renewable energy will not only power homes but also fuel the burgeoning electric vehicle segment. By creating an ecosystem where clean energy sources power our transportation, we pave the way for a sustainable and resilient future.”
Mayank Bindal, Founder & CEO, Snap E Cabs: “There is a proposal to reduce the GST on the li-ion batteries from 18% to 5% overall, reducing the cost of acquiring EV’s. Since batteries are a major cost component in EV’s, the move to reduce the cost of batteries will make the product more lucrative for buyers. Over the past 5 years the government has focused a lot on building strong infrastructure. It is expected to continue improving and make efficient investments in energy, especially green energy and sustainable energy. The focus is on transitioning from carbon dependent to energy efficient policies. The new transport policies being adopted by the state govt is a testament to this shift. Many state transport authorities have announced the conversion of Petrol/Diesel cabs be converted into EV’s by the end of this decade. We look forward to EV financing getting priority sector lending status as the government’s ambitious target of 30% penetration to be achieved by 2023.”
Hari Kiran, Co-Founder and COO, eBikeGo: “As thе 2024 Budgеt approaches, the automotive industry eagerly awaits insights in the GST landscape, particularly for entry-level two-wheelers. Anticipation is around the potential FAME 3 scheme, PLI sops, and a revision of GST on electric two-wheeler. We hope for a continuation of grееn mobility еmphasis, building on the government’s understanding of thе symbiotic rеlationship bеtwееn еnvironmеntal sustainability and economic growth. Thе rеduction in customs duty on EV parts in thе prеvious budgеt spurrеd local manufacturing, and similar amendments are expected in thе 2024 budgеt. Calls for a uniform 5% GST on all EV spare parts, align with 5% GST on vehicles, which resonates with thе industry, as we aim for a more equitable tax structure.
Bharath Rao, Co-Founder / CEO, Emobi: “One of the foremost things that the industry is keenly expecting is the changes in the FAME 2 subsidies in the Union Budget 2024. This is one of the most significant aspects and the entire ecosystem is waiting to understand how the subsidy terms will be tweaked and extended. A significant trend which I foresee will bring a new twist to the market is the rise of battery swapping companies. Another aspect I urge the Government to consider is the difference in GST rates. Currently. EVs sold with included batteries have a 5% GST, while those sold without, especially for battery-swapping, face an 18% GST. Additionally, purchasing lithium batteries separately incurs an 18% GST, compared to the 5% GST when included in the EV purchase. This makes it difficult for companies investing in battery-swapping technology. The industry is looking forward to a budget that levels the playing field, encourages new ideas, and pushes the EV industry toward a sustainable and balanced future”.
Pragya Goyal, CEO & Co-Founder, Vegh Automobiles: “To capitalise on the momentum set out by the current government, the interim budget will need to take into account forging trade agreements that make exports more lucrative for companies seeking to diversify their production and emphasise bolstering the logistics sector. In light of the existing global constraints and monopolisation in the lithium supply chain, there is a pressing need for India to engage in research aimed at creating indigenous and cost-effective machinery and technology.”
Akihiro Ueda, CEO of Terra Motors: We anticipate the budget to introduce measures that will support this growth, such as incentives for EV production and infrastructure development. Cox Automotive’s forecast of new-vehicle sales reaching 15.6 million in 2024, with EVs making up over 10% of this, underscores the sector’s potential. We hope the budget will pave the way for more competitive pricing and increased EV adoption, aligning with our commitment to provide the masses with eco-friendly transportation solutions.
Nehal Gupta Director of AMU: “I am optimistic that the interim budget will be pretty positive for the auto financing sector, especially for EVs. With our government’s continuous drive to phase out conventional fuels like petrol and diesel and promote sustainable mobility, there is a high chance of getting an extension on the FAME-II subsidy for EV manufacturers. In this regard, I feel EV financing providers and fintech companies could benefit significantly, given the sector’s key role in supporting the masses to switch to electric vehicles. In fact, I firmly believe that now is the right time to grant Priority Sector Lending status to electric auto financing to help the nation meet its target of 30% electric vehicle penetration by 2030. Several financial institutions, including the Small Industries Development Bank of India (SIDBI) and IREDA, extend subsidised financing schemes for energy efficiency and renewable energy projects, benefitting MSMEs, fleet owners, EV leasing companies, and aggregators. These institutions could further benefit from the Priority Sector Lending status, which will potentially increase their access to credit and enable them to stimulate rapid growth in the electric automobile sector that is not limited to only the established companies or segments of the industry.”
Sushant Kumar, MD, AMO Mobility: As we approach the 2024 budget, my perspective on the auto financing sector is one of cautious optimism mixed with a strategic focus. The challenges of 2023, particularly the higher interest rates and increased cost of financing, have taught us valuable lessons in resilience and adaptability. With the global automotive financing market expected to grow at a CAGR of 3.18% through 2031, the potential for expansion is undeniable. However, this growth hinges on the ability to adapt to the Federal Reserve’s anticipated interest rate adjustments in 2024. For the upcoming budget, the sector could see more policies that further support and accelerate the growth of the auto financing sector, particularly in the realm of electric vehicles, aligning with our commitment to a sustainable future. These changes could breathe new life into the auto loan segment, offering a much-needed boost to both lenders and borrowers. In this evolving landscape, I think sustainable lending practices should be prioritised while exploring innovative financing solutions that cater to the changing needs of consumers. The focus should be on balancing risk management with growth opportunities, ensuring that our sector not just recovers but thrives in the post-pandemic economy.”
Shubham Vishvakarma, Co-Founder and Chief of Process Engineering, Metastable Materials: “A large volume of India’s end-of-life lithium-ion batteries is exported globally for recycling or just processed as an intermediate black mass and then exported. Hence, massive R&D investments are required, particularly to create strong competencies and lab testing facilities for the proper end-of-life Lithium-ion battery recycling. This not only contributes to responsible environmentalism but also nurtures a talented pool of individuals. Another area, where we are hopeful for is the Production-Linked Incentive (PLI) and it’s extension to battery recycling. This would also be a strategic approach as by expanding the range of the scheme beyond just the Advanced Chemistry Cell manufacturing, we open up the opportunity to capture the entire value chain. This extension will incentivize the setting up of homegrown recycling firms instead of shipping away the dead batteries. We also recommend that the recycling of lithium-ion batteries be incorporated into the Carbon Credit Trading Scheme. This inclusion, in particular for negative-value battery chemistries feasibility will provide substantial support to India’s position in the carbon credit markets and also demonstrates our continued dedication to sustainable solutions.”
Ashish Deswal, Founder, EarthtronEV: “In an environment of unprecedented growth, when global rating agencies like S&P foresee India as the world’s third-largest economy by 2030 and forecast 7 percent GDP growth in coming years, the industry is not just optimistic but ambitious as well to raise the bar on all fronts. So, with these positive sentiments, we expect the upcoming budget will motivate electric vehicle (EV) manufacturers and cab service providers with supportive policies. Incentives and relaxations for establishing EV charging hubs across India are also required to help the Union Government achieve its carbon emission target within a specific timeline. Charging infrastructure is a crucial component of the electric vehicle ecosystem. We are also optimistic that the finance minister will come up with incentives, subsidies, or tax breaks to encourage investment in EV charging infrastructure. This could include reduced taxes on equipment, customs duty exemptions, or other financial incentives. Also, the Union Budget 2024 is expected to be a turning point for the EV industry, with a GST cut expected to be 5 percent or nil on lithium-ion battery packs and cells, benefiting the EV sector, which is primarily reliant on batteries. we look forward to policy measures that simplify regulatory processes, provide a roadmap for infrastructure expansion, and address any barriers to entry or operation. Besides, we are hoping the government may allocate funds for R&D in the EV sector, including charging technology.”
Rajesh Gupta, Founder & Director, Recyclekaro: “The upcoming budget holds a pivotal role in steering India towards a sustainable future by fostering the growth of battery recycling. The circular economy’s cornerstone, battery recycling, addresses mineral scarcity and reinforces our supply chains, paving the way for self-sufficiency in battery materials. While regulations like the Electronics Waste Management Rule and Batteries Management Rule have strengthened the recycling industry, persistent challenges call for solutions. To further empower this sector, streamlined recycling policies and incentives for pioneering waste management solutions are imperative. The rapidly growing adoption of electric vehicles is a catalyst for the EV battery recycling industry. Initiatives such as FAME, PLI, and other incentives should be amplified to fuel this momentum. A tailored PLI scheme dedicated to lithium-ion battery recycling will be a game-changer, amplifying the sector’s growth while advancing India’s sustainability goals. As we approach the budget, investing in these strategic measures will not only invigorate the recycling industry but also cement India’s position as a global leader in sustainable practices.”