Union Budget 2022–23: What does the EV sector expect?
Electric vehicles (EVs) and EV roadmap are trending in India. The recent introduction of consolidated guidelines for charging infrastructure by the Union Ministry of Power is already a positive step towards an accelerated EV transition. As we await the Union Budget 2022–23, we are hopeful that the government will continue to focus on the emerging electric vehicle space in India.
In 2021, we witnessed an exponential increase in electric two-wheelers (E2Ws) sales with nearly 2.34 lakh units sold as compared to 1 lakh units in 2020. This was made possible because of the center’s FAME II scheme and we hope that with this new budget the government will maintain momentum and the demand for electric vehicles will continue to surge.
A major breakthrough that the EV sector expects from the upcoming budget would be a comprehensive and holistic plan regarding charging infrastructure in India. A significant investment towards setting up a powerful charging infrastructure will increase EV penetration across the nation. There is also a huge requirement to set up EV charging stations in significant locations such as residential areas, offices, commercial establishments, and parking spaces. We hope the budget will allow EV charging stations to operate with open access, utilize renewable energy for charging infrastructure, and upgrade the present structures to cater to high power fast charges. A reduction in tax rates for charging-as-a-service will help both existing and new players to set up more charging stations. The overall success of the EV industry depends on a robust functioning charging ecosystem to alleviate customers’ concerns related to battery charging and range anxiety.
Additionally, the current manufacturing setup of EVs in India is highly dependent on imports as there is a lack of access to raw materials, capital, skilled labor, and the right battery technology. We are hopeful that the government will continue incentivizing R&D in e-mobility for innovation in battery technology that is affordable and local. This will streamline the supply chain and lead to long-term energy security.
Another great intervention from the government would be to make the PLI scheme more inclusive so that more EV manufacturers especially smaller startups can benefit from the scheme. Besides this, we expect a partial relaxation in the localization norms for FAME II incentives which will only increase customer demand.
An improved duty structure will certainly pave the way for EV manufacturers to increase their market share in the automotive sector. Reduced GST on EVs and charging infrastructure will help to further bring down production costs, increase working capital for OEMs and decrease EV price for customers. A GST reduction for standalone batteries and improved incentive in battery swapping/subscription models in the FAME II outlay should also be considered. A reduction in customs duty on lithium-ion cells will help EV manufacturers to significantly scale up production, thereby reducing the vehicle price for customers.
We are optimistic that the 2022 budget will help India realize its full potential and transition into the era of e-mobility. We are confident that the government will support the EV industry and will take the right steps towards placing India on the global EV map.
