EV Sector Hopes For Charging Push, targeted Incentives From Budget 2021

With just 5 days to go for Budget 2021 every citizen, expectations have rarely been so high from the government. And the reason is not just the repair work from the shock of Covid 19 has delivered. For once, people seem to realise that the government will actually have some leeway to break some self imposed boundaries, be it by way of the fiscal deficit or extra ordinary incentives for Atmanirbhar Bharat. The time for caution is long past, when weighed against the risk of permanent long term damage to the economy if steps are not taken now. EV Manufacturers fall precisely in this critical spot, and have high expectations accordingly.

For one, EV adoption is no longer a matter of if or even when, but more like how quickly.

The FAME-2 scheme will provide subsidy support for EVs consisting, 10 Lakh 2-wheelers, 5 lakh 3-wheelers, 55,000 cars, and 7090 buses till 2021-22 that will provide the volumes to kick start the industry.

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To accelerate research, development, and demonstration of technologies, the Department of Science & Technology (DST) is working on the EV R&D mission under which three separate technology hubs will be created: 1) EV Energy Storage, 2) EV Drive trains, and 3) EV Power electronic components. 

Pawan Munjal , CMD at Hero Motors Company, which has a significant stake in EV startup Ather Energy besides its own plans, hopes for a simpler GST structure, rather than the multiple slabs right now. That makes sense, as EV’s despite attractin only 5 percent GST for the customer, have a mixed input GST structure. Batteries are taxed at 18 percent, tyres and lights 28 percent, and other parts at 18 percent.

Chetan Maini, EV pioneer with his Reva Auto and now Co-Founder and Vice Chairman at Sun Mobility stresses on enabling charging infra as well as a more conducive policy environment for battery swapping infrastructure.

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For Deepak MV, Co-Founder and CEO at Etrio, a fast growing EV company says that  “the key expectations from Budget 2021 that we have is the enablement of charging infrastructure in the country at a faster rate. Also, more details and information of the PLI scheme to support for localization of the EV supply chain in the country to enable innovation should be circulated.”

“The government should incorporate an attractive financing option for electric vehicles and a faster roll-out of tax refunds and incentives should be implemented. A smoother regulatory approval system will also boost the sector. We also hope that the Budget addresses the inclusion of retro fitment incentives in FAME II policy,” Deepak added. 

Ravichandran Purushothaman, President at Danfoss Industries Limited echoes some of the views as he asks that “proper charging & storage mechanisms must spread throughout the country. More budgetary outlay is also required in the commercial vehicles sector to draw on the achievements of FAME scheme.

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While reduction in taxes, incentives for electric cars & other vehicles, etc. would be welcome in this year’s Union Budget, incentives for R&D for both public and private sectors in India will also be pivotal, and an equally welcome step.”

The PLI scheme comes in for special mention by many industry honchos, with most in favour of expanding it to cover more supplier side sectors for EV’s, besides e-bikes, and

Industry body Society of Manufacturers of Electric Vehicles (SMEV) has asked for a rejig of the  FAME II scheme or reintroduction of  FAME I, due to the achievement of  less than 10 per cent of its target by FAME 2.

The Rs 10,000-crore FAME-II scheme which is to be implemented over a period of three years, came into effect from April 1, 2019.

The industry body also suggested a  ‘green cess’ on polluting vehicles to accelerate electric mobility, while also seeking reduction of GST on EVs sold without batteries. SMEV director

SMEV Director General Sohinder Gill , in a letter to Finance Minister Nirmala Sitharaman, wrote that “our analysis shows that efforts must be made to generate demand and we believe that this can be easily done by the government’s intervention relating to streamlining, ironing out policy details and adequate announcements in Budget 2021-22.”  SMEV has argued that FAME II could not attract customers to shift from polluting petrol bikes to electric two-wheelers, mainly because the preconditions and qualification criteria of FAME-II made the bikes unaffordable to the mass market customer despite the subsidy.

“Recently, MoRTH approved the registration of EVs without the battery, therefore, vehicles without batteries should also fall in the EV GST category. Hence, we urge the government to reduce it to 5 per cent, similar to GST applicable on EVs”

SMEV also sought extension of the phased manufacturing programme (PMP) saying COVID-19 has derailed the growth path of the industry, which has weakened the creation of the local component market.

As of now,  the government has extended the deadline for local manufacturing to be eligible for incentives under the FAME II scheme for parts like the electronic throttle for all categories of EVs till April 1, 2021, from earlier deadlines ranging from April 1, 2020, to October 1, 2020.

These are hope that will qualify as ambitious but not impossible in an extraordinary year, when the FM has also promised to go the extra mile for industry. Come Feb 1, we will know just how far that mile stretches.