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EV Industry Voice Its Wishlist Ahead Of Budget 2024 GST, reallocation of subsidies including FAME and PLI, and boost for recycling and R&D among concerns of electric vehicle sector ahead budget session mid-July.

By Priyanka Tanwer

Opinions expressed by Entrepreneur contributors are their own.

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As the first session of the 18th Lok Sabha is set to start from June 24, the central government is likely to present the full Budget for 2024-25 by mid July.

The Finance Ministry will start its pre-consultation Budget meetings with various ministries and stakeholders by June 17.

With this, a way of expectations has emerged in the electric vehicle industry with various industry leaders putting their thoughts forward. The entire market is hopeful of balanced budget and looks up to government for the solution to the issues and challenges they face in the ecosystem.

They are also hopeful about the FAME 3.0 which is likely to be released during the budget session.

The government had reduced the budgetary allocation for the FAME scheme by nearly 44 per cent to INR 2,671 crore for FY25 in the interim budget presented in February 2024.

According to the Grant Thornton Bharat, the incentive to government or state owned corporation owned buses should be extended to privately owned buses also as they significantly help in intercity commute and are used favourably by the passengers.

"Passenger cars have been outside of the FAME programme and the expectation is there to have this segment covered albeit with a cap on the cost of the vehicle. One should also add to say that all this without support for investments in Infra for EV like charging stations and battery technology may not mean much. There has been a fair amount of shift in consumer interest to EV and one expects the current government to continue with their goal to achieving green mobility," Sridhar V, Partner, Grant Thornton Bharat said.

Finance Minister Nirmala Sitharaman will table the Union Budget 2024-25 next month, and we expect that this will lay the foundation stone of developing a robust EV ecosystem in the country to achieve our sustainable development goals and position India as a global EV leader, Amitabh Saran, CEO & Founder, Altigreen said.

"This year, we expect announcements that will address the existing challenges such as reduced criteria in PLI to support young companies; push to nationalized banks for financing of EVs; and a small budget for standing guarantor for FLDG in vehicle financing," he added.

Speaking on the upcoming subsidy, Maxson Lewis, Founder & CEO, Magenta Mobility said that the overall context is that the subsidy, whether it's 10,000 crores or 20,000 crores, is relatively very small compared to the overall oil subsidy.

"Redirecting a portion of the oil subsidy towards EVs could significantly reduce the import bill. Looking ahead, I believe the government will introduce a new version of the subsidy scheme, possibly akin to FAME II. I anticipate the subsidy to be at an equivalent value to FAME II. However, there will likely be very specific qualifications regarding the types of vehicles eligibility, as compared to any type of vehicle earlier," Lewis added.

He emphasised on the research and development that is needed to strengthen the industry and said that a significant focus on the same not only in EVs but on batteries is needed.

Meanwhile, Pure EV said they anticipate a potential shift towards the Production Linked Incentive (PLI) scheme.

"This initiative would significantly bolster the economy by enhancing the quality of goods, streamlining supply chains, and supporting original equipment manufacturers (OEMs). We are optimistic about the prioritization of public infrastructure, including the development of charging stations and the expansion of EV-compatible public transport," Rohit Vadera, CEO, Pure EV said.

As per the Annual Deloitte Global Auto Consumer Survey (GACS) 2024, while environmental benefits and cost are primary drivers for EV adoption, around half the consumers would like to switch over to EV due the government incentives and subsidies, indicating that FAME and other policies have played their part in increasing the demand.

There is also a growing acceptance for Hybrids (HEVs) that indicates a need to accommodate HEVs also in the broader EV umbrella while looking at policy making.

Government has been continuously encouraging and supporting the usage of EVs through various subsidies and incentives and this has continued in the Interim budget 2024. Along with the benefits for 2W and 3W along with e-buses there is a renewed effort towards growing the charging ecosystem.

Speaking on the same, Atul Jairaj, Partner, Consulting, Deloitte India said that while EVs incur a 5 per cent GST on vehicle purchase, we observe that charging service is at 18 per cent GST. For increased usage and deployment of public charging, GST on charging service might need to be rationalized and brought down to 5 per cent.

Echoing the same, Pratik Kamdar, CEO & Co-founder, Neuron Energy said, "One critical expectation is the revision of GST for entry-level two-wheelers and a uniform 5 per cent GST on all EV spare parts, which would create a more equitable tax structure, fostering widespread EV adoption."

The Two wheeler market is getting used to the current scheme and hence the focus from the new budget can be to support the OEMs for manufacturing of Batteries and EVs.

Jayapradeep Vasudevan, CBO, Raptee said that "FAME 2 has been gradually stepped down in May'23 and again in March'24 and currently the EMPS offers a benefit of Just INR 10000 per two wheeler. This will ease out the pressure on OEMs who are grappling with higher manufacturing costs, customer price sensitivity and the profitability. This will help build the overall EV capacity for India which is on its mission to achieve 50 per cent EV penetration by 2030."

Meanwhile, battery recycling and venture capital industry also look up to the government for various issues including regulatory adjustments and allocation of funds for the development of a comprehensive charging infrastructure network.

Nitin Gupta, CEO & Co-Founder, Attero said that with the anticipated launch of FAME-3, there is a significant opportunity to extend financial incentives specifically for the formal recycling of Li-ion batteries. Implementing these changes will enhance our environmental efforts, boost economic growth, and foster technological innovation within India's EV and battery recycling industries.

"We also recommend that the government consider regulatory adjustments, such as reducing taxes and import duties on recycling equipment and prohibiting the export of used lithium-ion batteries, precious metal bearing PCBs, and black mass in the upcoming budget. Similar steps are being take by the EU and the US. This will not only help India retain and secure critical materials that are crucial for India's energy security and continued advancement in the technology space but also reduce its dependence on imports from China," he added.

Pratekk Agarwaal, Founder and General Partner, GrowthCap Ventures said that allocation of funds for the development of a comprehensive charging infrastructure network, involving partnerships with EV start-ups and established players for deploying innovative charging solutions should be include in the upcoming scheme.

VG Anil, CEO, ARENQ said that the growth of the electric vehicle industry relies heavily on government support and incentives that encourage innovation and wider adoption.

"We're hoping to see significant funds directed toward expanding EV infrastructure, like more charging stations, and incentives for battery technology research and development. The FAME 3 subsidy should help make EVs more affordable for everyone, promoting a greener future for our nation," he added.

The industry has high expectations that this substantial backing will accelerate the adoption of electric vehicles in India. An increase of approximately 50 per cent in the budget for FAME III, from the INR 10,000 Crore outlay of FAME II, seems reasonable, Abhinav Kalia, CEO and Co-Founder, ARC Electric added.

Priyanka Tanwer

Sr. Correspondent

With eight years of experience covering various beats for the digital and print media, now covering electric vehicles and sustainability for Entrepreneur India, keeping a nose for innovation and new technology in this futuristic sector. You can reach me at     
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