Budget 2023-24: Linking Economy With Environment Is Laudable

Several key announcements have been made to give a boost to India’s automotive and growing electric mobility sector by Finance Minister Nirmala Sitharaman while presenting the Union Budget 2023-24.

Amongst the initiatives announced, some of the key highlights were introducing viability gap funding for battery energy storage solutions, scrapping of old polluting vehicles, an extension of subsidy on the li-ion cells for EV batteries and reduction of customs duty on li-ion batteries from 21 per cent to 13 per cent. 

The government's dedication to promote environmental sustainability, as emphasised by the finance minister in the recent Union Budget 2023, is a commendable development.

One of the most impactful decisions made by the government in the Budget 2023 is the extension of customs duty exemption for the import of capital goods and machinery required to produce lithium-ion batteries for EVs in India. While this move will ensure making EV batteries affordable, it will also solidify our efforts towards our mission of an Atmanirbhar Bharat. 

This decision will give a push to the ‘Make in India’ initiative of EV batteries and the setting up of lithium-ion cell plants in the country. On the other hand, this will also lead to improved returns on the investments made by EV batteries manufacturers and making domestic manufacturing of lithium-ion cells more competitive.

These welcome initiatives will accentuate the demand of electric vehicles and encourage localised manufacturing of EV components. The policy introduced by the government over the scrapping of the old polluting vehicles will accelerate the transition towards electric vehicles, which will further push the country closer to its 2070 net-zero goal. 

The government's dedication to the green growth approach promoting environmental sustainability, as emphasised by the finance minister, is a commendable development. Stressing on the reducing of carbon footprint and ensuring the employment generation through green growth initiatives taken by the Government shows a deep comprehension of the connection between the environment and the economy.

The subsidy funds have been doubled by the government in Budget 2023-24 for the EV seekers with an aim to support the demand creation. The major issue which is still unresolved is the issue of skyrocketing Goods and Services Tax (GST) on spare parts of EV. While the EVs witness the GST rate of 5 per cent, other EV spare parts excluding batteries have 28 per cent overcharge.

As per the expectations and demand of the EV industry, the government has doubled the fund allocated under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) II. It is a highly commendable decision and it is crystal clear that India’s EV industry requires more time to stand on its feet.

The seven principles and priorities adopted in Amrit Kaal’s first budget are green growth, youth power, inclusive development, reaching the last mile, infrastructure and investment, unleashing the potential and launching digital platforms. These seven main priorities, referred to as Saptrishis, will drive sustainable and eco-friendly and economic development in the direction of India seeking a leadership role in mitigating the global climate crisis.

Budget 2023-24 could prove to be quite positive for the rural economy as it talks about investments and credit schemes in agriculture, fishery and cattle, which would boost income of rural citizens and also allow them a higher capacity to own L5 (commercial e-rickshaws) and repay EMIs.

(Pankaj Sharma, Co-Founder and Director, Log9 Materials)