Budget 2023-24: Boosting Demand For EVs

We welcome Budget 2023-24 and the government's dedication to promoting environmental sustainability, as stressed by Finance Minister Nirmala Sitharaman. Also, the announcement of the extension of subsidies on Electric Vehicle (EV) batteries for one more year will make EVs cheaper in India. This, coupled with the decision to continue the concessional duty on lithium-ion cells for batteries for another year, will act as a strong push for greater EV adoption. 

These are welcome initiatives aimed at helping boost the demand for EVs. The policy on the replacement of old polluting vehicles, in particular, should drive the transition to electric mobility. 

The past few years have seen the electric vehicle industry experience a positive and steady push. The demand for EVs is on the rise and the end consumer is more accepting of the technology. All this while, the government has displayed transparent commitment toward the promotion and adoption of electric mobility. It’s heartening to see them walk the talk with the announcement made pertaining to the electric mobility sector in the Budget 2023-24. 

The exemption on customs duty extended to the import of capital goods and machinery required for the manufacture of lithium-ion cells for batteries used in electric vehicles is a bold move by the Finance Minister. This will indeed provide the necessary impetus for cell manufacturing in India. Furthermore, the extension of subsidies on EV batteries for another year will certainly make EVs a cheaper and more tempting proposition for those who have been on the fence with regard to making a transition to electric mobility. 

Having said that, more could have been done and this is an opportunity missed. Government initiatives like the FAME scheme have given a good platform to the industry. We were hoping for an extension of the scheme, until Li-ion cell manufacturing starts in India (under PLI). There were also talks about increasing the scope of FAME to include light / commercial vehicles in the scheme. However, nothing was said on the topic.

In addition to that, the PLI scheme currently in place has no provision to be eligible for startups and MSMEs. With the PLI scheme catering to only the established big companies, startups and MSMEs tend to lose confidence because most are already struggling for capital.

The inclusion of startups and MSMEs within the PLI ambit will certainly augur well for the industry. Last year's budget had given strong indication of the implementation of the Battery Swapping Policy. Although NITI Aayog has consulted stakeholders, we are still awaiting the final policy.

Overall, we are happy with the direction in which things are moving as far as the EV sector is concerned. We are confident all these factors will be considered and we’ll soon see implementation on most of these, if not all, in the near future.  

(Dr. Amitabh Saran, Founder & CEO of Altigreen.)