Budget 2024-25 Expectations: Electric Vehicle industry looks for green boost and strategic reforms

New Delhi: As Modi 3.0 government prepares to unveil its first budget since assuming power, expectations within India's electric vehicle (EV) industry are high, anticipating bold reforms and strategic allocations to propel sustainable growth. Scheduled for presentation on July 23 by Finance Minister Nirmala Sitharaman, this budget marks a pivotal moment for the EV sector, amidst increasing calls for governmental support to bolster infrastructure and incentivise green mobility initiatives.

Industry Voices and Expectations

Key stakeholders from the EV sector have articulated their expectations, emphasising the critical need for supportive measures to foster a conducive ecosystem for electric mobility:

Devndra Chawla, MD and CEO, GreenCell Mobility: Advocating for sustainable development, Chawla highlights the necessity of permanent viability gap funding for State Transport Units (STUs) to ensure financial stability. He proposes infrastructure sector financing tags for EV projects, capital expenditure subsidies for private bus operators deploying e-buses on intercity routes, and incentives for battery recycling. These measures, he argues, will lower interest rates, promote sustainability, and drive widespread adoption of electric buses.

“We emphasise the importance of an infrastructure sector tag for financing to electric mobility projects and propose a capital expenditure subsidy for private bus operators that deploy e-buses on intercity routes. Categorising electric mobility loans as Priority Sector Lending and introducing incentives for battery recycling are critical steps towards lowering interest rates and promoting sustainability,” Chawla said.

“Standardising Green energy open access rules, toll exemptions for electric buses, optimising charging costs through regulatory measures and opening government electric bus depots to private players are important to creating a suitable ecosystem. Initiatives such as wayside charging infrastructure on national highways, specialised facilities at transport hubs and strategic highway adoption plans for pure electric bus operations will also help sustainable mobility," he added.

He further said, "Providing capital subsidy to private electric bus operators on inter-city routes will increase adoption on a large scale. The government's commitment to boosting manufacturing and exports is evident through PLI Schemes for Automobiles, Auto Components, Advanced Chemistry Cell (ACC), and Battery Storage."

To improve cost and sustainability, GreenCell Mobility MD & CEO highlighted, "We strongly propose for a 5% GST on lithium-ion batteries, EV spare parts, components and correcting inverted duty structure in EV production. Standardising battery switching and tackling low-cost finance difficulties are critical for long-term growth."

As the demand for electric vehicle grows, “significant coordination efforts are required to build electric mobility infrastructure, particularly charging stations," Chawla noted.

A strong infrastructure is essential for supporting the industry's growth, he concluded.

Sameer Aggarwal, Founder & CEO, Revfin: Focusing on financial inclusivity, Aggarwal underscores the role of fintech in facilitating access to funds for EV purchases. He anticipates government support for green initiatives, aiming to align with Bharat's net-zero aspirations. Aggarwal emphasises the need for measures that support fintech growth, thereby advancing sustainable mobility solutions in the EV sector.

“We anticipate government backing in green initiatives, particularly in the EV sector. With significant investments required for financing EV purchases, fintech companies like ours can play a vital role in facilitating access to funds, thereby promoting sustainable mobility solutions,” Sameer Aggarwal said.

"As we approach the new budget, our expectations are high for measures that will support the fintech industry's growth and contribute towards a greener, sustainable future, fostering economic growth and technological advancement in the EV sector," he added.

Mukesh Taneja, CEO and Co-Founder, GT Force: Taneja stresses the importance of a comprehensive policy framework that sustains demand incentives for consumers while boosting domestic manufacturing and innovation in the EV space. He calls for increased budgetary allocations to expand EV charging infrastructure nationwide and incentives for battery technology development and localisation to enhance competitiveness and affordability of Indian-made EVs.

“We urge the government to introduce a robust, long-term successor to addresses the evolving needs of the EV ecosystem. The new framework should not only continue demand incentives for consumers but also focus on supply-side interventions to boost domestic manufacturing and innovation," he said.

“We anticipate increased budgetary allocation for expanding EV charging infrastructure nationwide, as this remains a key factor in boosting consumer confidence in electric mobility,” Mukesh Taneja added.

“We also hope to see incentives for battery technology development and localisation of EV components, which are crucial for reducing costs and enhancing the competitiveness of Indian-made EVs," he further stated.

“We expect the government to consider reducing GST rates on EV components and batteries from the current 18% to 5%. This tax rationalisation would help offset the potential price increase resulting from the conclusion of subsidy programs and keep EVs affordable for the masses,” GT Force CEO added.

Budgetary Expectations

Industry leaders are united in their calls for specific fiscal measures in the upcoming budget:

• GST Reduction: A consensus among stakeholders urges a reduction in GST rates on EV components and lithium-ion batteries from 18% to 5%, aiming to mitigate price escalations post-subsidy phase-outs and maintain affordability for consumers.

• Infrastructure Investments: Significant allocations for expanding EV charging infrastructure across national highways and transport hubs are deemed critical to bolster consumer confidence and promote widespread adoption of electric vehicles.

• Policy Support: Priority sector lending status for electric mobility loans, alongside regulatory measures to optimize charging costs and ensure payment security mechanisms, are viewed as essential steps towards fostering a robust EV ecosystem.

With India's EV sector poised for rapid growth, the forthcoming budget presents a timely opportunity for the government to reaffirm its commitment to green initiatives and sustainable economic development. The expectations voiced by industry leaders underscore the pivotal role of proactive policy interventions in accelerating the transition towards a greener, more resilient mobility landscape.

As Finance Minister Nirmala Sitharaman prepares to present her historic seventh consecutive budget, all eyes are on the government's fiscal blueprint to propel India's electric vehicle industry forward, aligning with global sustainability goals while fostering economic growth and technological advancement.