Union Budget 2024: Will Modi 3.0’s first budget power-up the EV Sector?

The Union Budget 2024 is eagerly awaited, especially by the electric vehicle (EV) sector, which is anticipating significant policy support and incentives.

With the Modi government entering its third term, stakeholders in the EV industry are hopeful that the new budget will provide the boost needed to accelerate India’s transition to electric mobility. Naturally, then, the EV industry has high expectations from Finance Minister Nirmala Sitharaman and her cohorts.

Decarbonizing & electrifying our commercial fleet
Inderveer Singh, CEO and Founder of EVage, highlights the urgent need for government intervention to reduce pollution from commercial vehicles. “Recently, the Union Minister of Heavy Industry indicated that the FAME III norms are unlikely to be announced in the upcoming budget. Nevertheless, we remain hopeful that these norms are still under consideration and that some provisions might be included,” Singh says.

He emphasises the importance of decarbonising commercial vehicles, which account for a significant portion of vehicular pollution. Effective policies and government support are essential to achieving India’s goal of 30 electric vehicle sales by 2030.

Battery Swapping and GST Reforms
Chetan Maini, Co-founder and Chairman of SUN Mobility, stresses the need for a level playing field for all technologies, particularly in terms of GST and subsidies. He expects the budget to introduce a comprehensive Battery Swapping Policy, launch FAME III with increased allocation for e-buses, and incentivize local production of EV components.

“With electric bus penetration expected to double this fiscal year, the Budget should focus on encouraging innovations in battery technologies without curbing advancements through standardization,” Maini says. He also advocates for extending incentives to fleet operators and rolling out EV infrastructure on a public-private partnership basis.

Rethinking Customs Duty
Pratik Kamdar, CEO and Co-Founder of Neuron Energy, reflects on the positive impact of reduced customs duties on EV parts in the previous budget and hopes for similar measures this year.

“We anticipate progressive measures in the July 2024 budget to further encourage domestic production and align with the ‘Make in India’ initiative,” Kamdar states. He suggests revising GST for entry-level two-wheelers and imposing a uniform 5 per cent GST on all EV spare parts to foster widespread adoption. Kamdar also calls for a cohesive strategy under FAME III to accelerate EV adoption, including subsidizing financing options and reducing GST on batteries by 13 per cent.

Boosting Accessibility and Infrastructure
Kunal Arya, Co-Founder and Managing Director of ZELIO Ebikes, points out several key measures that could drive growth and adoption of EVs. He advocates for increased subsidies to make EVs more affordable, expanding the network of charging stations powered by renewable energy, and reducing GST on batteries and components.

“Simplifying financing options for EV purchases will further encourage adoption by easing the financial burden on consumers,” Arya notes. He also emphasizes the importance of promoting fleet electrification, providing export incentives, and supporting skill development programs to build a knowledgeable workforce in the EV industry.

Long-Term Policies and Incentives
Mukesh Taneja, CEO and Co-Founder of GT FORCE, views the upcoming budget as a critical juncture for India’s EV industry. With the short-term EMPS 2024 set to end on July 31, 2024, Taneja urges the government to introduce a robust, long-term successor.

“We anticipate increased budgetary allocation for expanding EV charging infrastructure nationwide,” he says. Taneja also hopes for incentives for battery technology development, localization of EV components, and reducing GST rates on EV components and batteries from 18 per cent to 5 per cent.

Fintech and Regulatory Support
Sameer Aggarwal, Founder and CEO of Revfin, anticipates government backing in green initiatives, especially 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,” Aggarwal explains.

He looks forward to clearer regulations and supportive policies in the budget to drive innovation, focusing on streamlined regulatory processes, increased funding opportunities, and enhancements in digital lending, SME financing, and cross-border trade facilitation.

Recycling and Green Energy Projects
Prassann Daphal, CEO at Recyclekaro, expects the budget to emphasise sustainability, particularly in the battery recycling sector. He calls for a reduction in GST on waste lithium-ion batteries from 18 per cent to 5 per cent, an extension of the FAME II Scheme, and a specialised Production-Linked Incentive (PLI) plan for recycling lithium-ion batteries.

“Higher funding for research and development of battery recycling infrastructure and technologies is also crucial,” Daphal asserts.

Incentives for Charging Infrastructure
Xitij Kothi, Co-founder of Vidyut, highlights the need for clearer policies and incentives for charging infrastructure. He hopes for government support in addressing the disparity in subsidies and GST on EV batteries, which remains a significant challenge.

“A framework and incentives from the government to fuel the growth of the secondary market for EV batteries will greatly benefit the industry,” Kothi adds.

As the Union Budget 2024 approaches, the EV sector will be looking at tomorrow’s announcements with bated breath, remaining hopeful that the government will introduce measures to support sustainable mobility, foster innovation, and strengthen India’s position as a global leader in electric vehicles.