Prime Minister Narendra Modi wants Indians to adopt electric vehicles and cut dependency on petrol and diesel vehicles. The government has set a target that 30% of all vehicles sold in India by 2030 will be electric. But to meet this target, the government needs a comprehensive plan with a focus on manufacturing, research and development, and adoption.
Industry experts feel that the time has come for the government to push for the adoption of EVs as, according to an estimate, India will become the fourth largest market for EVs by 2040.
Also, any announcement in the sector in the budget will only give a further push to accomplish PM Modi's dream of making India a self-reliant country. Experts say that the upcoming budget is an opportunity to introduce measures that will see more EVs plying on the roads in the coming years.
The Union Budget 2021-22 is likely to see major announcements as industry players look for a corpus in setting up EV infrastructure such as charging stations. The development of infrastructure to charge vehicles is the biggest challenge for the adoption of electric vehicles in our country. But the US-based Tesla's entry into the Indian market has raised hopes that the government could announce a slew of measures.
According to Manish Bhatnagar, Managing Director, SKF India, 2021 could prove to be a pivotal year for the sector.
"There should be more clarity on the EV policy as well as the Production Linked Incentive (PLI) scheme. Furthermore, we are hopeful about the much-awaited scrappage policy. Along with giving a boost to automobile sales, the policy will give enough importance to the fitness of a vehicle," he said.
Jeetendra Sharma, founder of Okinawa Autotech, said that 2021 can be a revolutionary year for the EV sector and urged the government to take steps to place India on the global EV map.
"The government should reconsider the taxation framework applicable on raw material and the final product. The raw materials currently attract 18% GST and tax on outward supplies currently stands at 5%. The government should reconsider this to help manufacturers in optimizing the cash flows," Sharma said.
Chetan Maini, Co-Founder, Vice Chairman at SUN Mobility with a focus on the EV industry, said that the primary expectation is the enablement of charging and battery swapping infrastructure in the country for electric vehicles at a faster rate with a firmer commitment from a policy standpoint by the government.
"We are looking forward to more clarity and information on the PLI scheme to support localization of the EV supply chain in the country to enable innovation. Accelerating investment from these companies would help benefit the EV industry. We are also expecting a reduction of GST on charging/swapping infrastructure services & EV batteries from 18% to 5%, in line with the current GST applicable on electric vehicles," Chetan said.
In 2020, Finance Minister Nirmala Sitharaman didn't mention EV even for a single time in her speech. But the government allocated over Rs 600 crore for the Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles in India programme (FAME-India). The government didn't provide any direct benefit to the stakeholders and focused on the scheme to boost EV demand.
Before that, the government had lowered the GST on EVs from 12% to 5% and given an additional income tax deduction of Rs 1.5 lakh on the interest paid on the loans to purchase such vehicles. In 2019, the government had also announced to invest in setting up an EV manufacturing hub. But most of these announcements are still on the papers.