There are several factors motivating India’s policies to accelerate the transition to e-mobility on one end, along with a growing consumer appetite. On the flip side, there is a rise in oil imports, increased carbon emissions, escalating costs due to the Russian-Ukraine war, and world responsibilities to combat global warming.
The center is considering incentives to promote domestic production of electric cars (EVs) and energy storage systems (ESS), which might strengthen India’s objectives for electric mobility.
India wishes to join the revolutionary change that the world is witnessing in the worldwide automobile industry as it attempts to transition to innovative, less energy-intensive solutions. The country is making investments in this transition to electric mobility.
Possible Union Budget Announcement
The central government proposes to include incentives to encourage the domestic manufacture of electric vehicles (EVs) and energy storage systems (ESS) in the forthcoming Union Budget 2023–24, according to a report by government officials.
The goal is to support India in achieving its objectives for electric mobility. Furthermore, the central govt may lower the current import duty of 5% to 20% on a wide range of materials needed to create lithium-ion batteries.
The Government official claimed that talks are taking place to improve the production of the complete ecosystem surrounding electric mobility. The official stated that several recommendations for evaluating the responsibilities are getting considered.
Taxes on components like synthetic separators, anodes, and cathodes used in lithium-ion batteries should decrease in order to promote the domestic production of EVs.
In the fiscal year 2022–2023, India spent $1.32 billion on lithium-ion batteries from April to September. It is below the $1.83 billion in investments completed during the fiscal year 2022–2023
The central government launched a production-linked incentive (PLI) program for automobiles and auto parts that comprise electric vehicles to encourage EV adoptions. This program is said to be of a value of Rs 25,938 crore.
There is a separate Rs 18,100 crore PLI to support domestic battery manufacture and lower the prices of advanced chemistry cells.
States have been urged to waive the road tax on EVs even when running costs are minimal to assist down the expense of ownership.
The government’s Faster Adoption of Manufacturing of Electric Vehicles (FAME) program has a budget of Rs 10,000 crore. It combines the incentive schemes India has set up to switch to EV-based transport networks that are more ecologically responsible, sustaining, technologically sophisticated, and effective.
The government has lowered the goods and services tax (GST) on electric mobility from 12.5% to 5%. Besides, reducing from 18.5% to 5% for chargers and charging stations. The Bureau of Indian Standards has recently released test standards for lithium-ion traction battery packs and solutions for electrically propelled road vehicles.
The 5th Union Budget Scheduled
Nirmala Sithataman, the finance minister, said that her upcoming budget is set to”follow the spirit” of past iterations and will continue to encourage development through public spending.
Sitharaman is slated to deliver her consecutive budget speech on February 1st, 2023, for the fiscal year that begins in April. It will be the final budget well before the scheduled general elections for April-May 2024 and the fifth for the Modi 2.0 government and Sitharaman.
The Verdict: EV adoption has picked up the pace
With the possibility of 100% FDI, modern manufacturing centers, and enhanced efforts to improve charging infrastructure, the electric vehicle industry in India is gaining momentum. Over Rs, 9000 crores has been invested by EV manufacturers in India. Also, the road transport ministry recently delegated an expert committee to develop plans for new safety regulations to get added to the current battery safety standards. The government has modified the EV battery regulations to ensure they meet safety regulations for lithium batteries, battery management systems, onboard chargers, battery pack design, heat propagation from the internal cell short circuits causing fires, etc.
Additional growth factors for the Indian EV market include government grants, regulations that favor higher discounts for electric two-wheelers built in India, and an increase in regional ACC battery storage production. The Ministry of Power released the Revised Unified Guidelines & Standards for Charging Infrastructure for Electric Vehicles (EV) in Jan and made changes in November 2022. Additionally, the government proposed a production-linked incentive program for the automobile industry in September 2021 to promote the development of electric and hydrogen fuel cell vehicles. From April through September 2022, India reported selling 277,910 electric two-wheelers, a 404% growth compared to the previous year when 55,147 units got sold. Besides, India sold 18,142 electric cars in H1 FY 2022–23, a 268% progress.
Only the union budgets will tell if the exemptions from customs duties currently granted for lithium-ion cells used to make phone battery packs will also extend to EV batteries and energy storage technologies. Let’s wait and watch. Meanwhile, India’s tremendous development in EV manufacturing and infrastructure is growing phenomenally!