New Delhi: All eyes are on Interim Budget 2024 to be presented in the Lok Sabha by the Union Finance Minister Nirmala Sitaraman on February 1. Expectations are high on new announcements, and amendments in policies announced in earlier budgets. The Indian automobile industry wants to move faster to green mobility with the help of new government policies, laws, taxation benefits and incentives and support to infrastructure development.
The two-wheeler industry immensely benefited from the incentives for electric vehicles(EV) and FAME Policy, according to Niraj Rajmohan, Co-founder and CTO, of Ultraviolette. He said, “The reduced GST rates on EVs and chargers have helped narrow the price gap between EVs and fuel-based vehicles. On the FAME subsidies, due to the cap on the price of eligible EVs, it does not apply to us due to the nature of our offerings, but we acknowledge the government’s rationale and hope for an increase in support. We believe that any extension of the FAME subsidy and removing all caps on the ex-factory price of EVs would greatly enhance our position.”
For enhanced globalization and promotion of the ‘Make in India’ programme for EVs, he said, “Encouraging multiple segments is crucial, and technology, being universal, shouldn’t be restricted. When it comes to EV exports, we are starting to reap the benefits, particularly as we embark on exporting vehicles to the developed countries. We hope for additional benefits associated with ‘Make in India’ for the global market, fostering innovation and growth. We eagerly anticipate favorable developments that align with our vision for technological advancements, sustainability, and global market expansion.”
Tax benefits
About the necessity for the reduction in GST rates for EVs and further to decrease the import duties on EV components in the Interim Budget 2024, Dinesh Arjun, co-founder and CEO, Raptee Energy, said, “As the EV industry gears up for substantial growth in the coming years, it is imperative for the government to foster a supportive ecosystem. To stimulate investment opportunities, there should be encouragement for potential investors, coupled with essential reductions in GST rates for electric vehicles and charging stations. Additionally, easing the burden on the industry can be achieved through a decrease in import duties on electronic components. The industry is particularly hopeful for a significant GST reduction, aiming to bring it down from 18% to 5% specifically for lithium-ion battery packs and cells, given their pivotal role in the EV sector. A concerted effort in the budget towards enhancing the ease of doing business and facilitating the entry of local players into the market is crucial.”
Raghupati Singhania, Chairman & Managing Director, JK Tyre & Industries, said, “We’re optimistic about the Interim Budget driving sustained economic growth. We expect impressive GDP growth, supported by progressive policy measures for business, investments, and resilience. Focus on last-mile connectivity, infrastructure, and consistent automotive policies would propel sectoral expansion. A robust budget is vital for India’s journey to become the third-largest global economy.”
Agriculture sector requires a boost through modern farming methods and financial literacy, said Narinder Mittal, Country Manager and Managing Director, Agriculture Business – CNH India and SAARC. He further said, “In order to prepare the agricultural sector for the future, we hope to see measures that can further aid in the adoption of innovation and technology to improve agri mechanization in our country. Initiatives to improve farmers’ skills and understanding of modern farming methods, financial literacy, and other relevant aspects will be crucial for the industry in the long run.”
Aftermarket
Aftermarket players like BluSmart and Zoomcar hope the budget 2024 would bring tax rationalization for EVs, mobility apps for easing transportation, and involvement of real estate developers for EV charging infrastructure development in India.
Anmol Singh Jaggi, CEO, BluSmart , said, “Transport sector and electric mobility play a crucial role in meeting climate goals. As we move to adopting cleaner alternatives, we are hopeful that the budget will take into account the country’s economic growth coupled with sustainability. The FAME policies have played a large role in boosting the EV sector and thereby enabling cleaner mobility solutions. Firstly, charging infrastructure is a critical enabler and while there is an 18% GST levied on EV charging, electricity supply is exempt, rationalizing the tax structure will help accelerate the vision of promoting electric mobility. Secondly, accelerating access to real estate & mandating charging infrastructure in urban developments will reduce range anxiety and make EVs a more viable option for public transportation.”
Greg Moran, CEO and Co-Founder Zoomcar, “Last year’s budget paved a path to higher adoption of EVs in India resulting in a sharp shift of customer mental models to make more greener & smarter choices. We anticipate the Union Budget 2024 to pave the way for innovative policies that accelerate sustainable mobility solutions and drive economic resilience which will help customers with cost effective solutions and mobility apps to support the evolution of transportation in the automobile industry.”
Auto Components
Auto components play a major role in the industry, thus players like Dana and Uno Minda have high expectations from Budget 2024 where they want the following reforms for the industry.
N.K Minda, Chairman and Managing Director at Uno Minda said, “We appreciate the recent Government policies initiative like PLI, FAME, and BNCAP in spurring growth however, to further bolster this momentum, we seek further policy intervention in rationalize GST structure for auto components, Incentives and tax benefits for R&D, implementing calibrated import duty structures for auto components.”
He furthermore said, extending the time limit for exemption under Section 115BAB for new manufacturing companies to March 31st, 2026, would incentivize further investment and job creation. Additionally, continued support for EVs through extended FAME-II subsidies, increased charging infrastructure investments, and reduced GST rates on EVs remains paramount for accelerating India’s transition to sustainable mobility. We urge the government to craft a budget that fosters confidence, ignites innovation, and paves the way for a thriving, sustainable, and globally competitive automotive sector.”
Gajanan Gandhe, Country Head and VP, Dana India, said, “The anticipation for an improved ease of doing business and streamlined regulatory processes within manufacturing carries, the government could consider reforms, such as digitization of approval processes, reducing administrative hurdles, and creating dedicated industry facilitation bodies. A reduction in industrial income tax and expediting setup and clearance procedures aligns with the industry’s need for a competitive edge. The government could offer targeted tax incentives for manufacturing entities, coupled with online platforms and creating specialized zones or clusters for automotive manufacturing could further streamline processes and encourage collaborative growth.”
“In the context of encouraging high-tech advancements, especially in semiconductors and EV components through the PLI scheme, the government takes initiatives between industry players and research institutions to accelerate technological innovation, reinforcing India’s position as a hub for cutting-edge automotive solutions. For the FAME II scheme the government might consider industry feedback. Additionally, promoting public-private partnerships for EV infrastructure development can accelerate the growth of electric vehicles,” he added.
