Modi 2.0 roots for E-Vehicles
Finance Minister Nirmala Sitharam, presenting her first Budget, was very clear on her intention to see more Electric Vehicles on Indian roads. She found some neoteric ways to boost EV culture in the country and commit to improving air pollution condition.
Here are all the initiatives announced to encourage e-mobility in the country.
Buying EVs is cheaper now
A drop in GST rates from 12 percent to 5 percent, which is a further drop from last year's 18 percent, has been proposed. Along with this the government has proposed to provide additional income tax deduction of up to Rs 1.5 lakh on interest paid on loans taken to buy electric vehicles. As per the government estimates these benefits together can make buying an EV cheaper by up to Rs 2.5 lakh.
Road and Infrastructure
The Phase II of FAME (Faster Adoption and Manufacturing of (Hybrid &) Electric vehicles in India) policy has been approved and implementation has begun from April 1, 2019. This will help in the growth of EV-driven public transport and provide push to developing the infrastructure needed to support EVs. The government will spend Rs 10,000 crore on this over the next three years. Further, the central government will spend a massive Rs 100 lakh crore to develop infrastructure over the next five years.
What’s in for Manufacturers?
There would be no better time for manufacturers to make these cars in India than this, as EV manufacturers will be eligible for deductions in capital expenditure under Section 35AD (1) of the Income Tax Act. Also, the customs duty on lithium-ion cells is being reduced to zero, this would strengthen the local battery production. Also, it will help in the creation of local manufacturing base and encourage component manufacturers to invest in this sector.
Additional custom duty and cess make conventional cars less attractive
Heightened customs duty on imported and assembled cars and their components and the increased price of petrol and diesel by an additional cess of Re 1, has made conventionally powered cars more expensive and less attractive.
“I wish to propose a number of initiatives as part of kick-starting the virtuous cycle of domestic and foreign investment,” quoted the Finance Minister in her budget speech.
All of these initiatives are in the right direction towards bringing more EVs on Indian roads. Ayush Lohia, CEO Lohia Auto Industries said,
“This decision (Government’s attempt to boost the sector) will represent the next generation in sustainable mobility and make them an attractive alternative to consumers.”
While we can expect some uncertainty about how these initiatives will be administered, but you can anticipate more EVs in India than ever before.