The electric vehicle (EV) sector in India is witnessing unprecedented growth, fueled by a commitment to green energy and environmental conservation. As the nation gears up for the Union Budget 2025, rising hopes are pinned on the automotive industry, particularly the electric vehicle segment. Companies within this sector have proactively presented their suggestions and demands to the government, anticipating favorable policy changes and subsidies that will help accelerate the adoption of electric vehicles across the country.
Tax Relief and Reduced GST on EV Batteries
One of the primary demands of EV manufacturers is to reduce the Goods and Services Tax (GST) on electric vehicle batteries from the current rate of 18% to a more manageable 5%. Such a decrease could significantly lower the overall cost of electric vehicles, making them more affordable and accessible to consumers. Additionally, the sector is advocating for reduced interest rates on EV loans to facilitate financial support for potential buyers, thus accelerating EV adoption and fostering a greener future.
Developing Robust Charging Infrastructure
For electric vehicles to gain widespread acceptance in India, a robust charging infrastructure is paramount. Industry players, including Oben Electric, have urged the government to take decisive action in this area. The upcoming budget might introduce special funding for the establishment and operation of charging stations, making it easier for consumers to switch to electric vehicles and enhancing user confidence in EV ownership.
Domestic Battery Manufacturing and the Production-Linked Incentive (PLI) Scheme
Battery manufacturing is a crucial component of the electric vehicle ecosystem. To stimulate domestic production, there is a growing call for the implementation of the Production-Linked Incentive (PLI) scheme. Companies like Maxvolt Energy are advocating for additional funding and tax incentives aimed at battery production and research and development (R&D), which would significantly contribute to India’s self-reliance in the EV sector.
Expansion of the FAME-II Scheme
The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME-II) scheme provides subsidies for purchasing electric vehicles. The budget is expected to outline an extension of this scheme along with new targets, which could further boost the sales of both private and commercial electric vehicles, thereby accelerating the transition towards sustainable transportation.
Green Bonds and Long-term Subsidies
Shalya Gupta, CEO of Credifin Limited, believes that the government might issue green bonds to fund the development of electric vehicle infrastructure. Coupled with long-term subsidies, this initiative could inject fresh momentum into EV manufacturing, ensuring financial viability for both producers and consumers in the electric vehicle ecosystem.
Expectations from the Government for the EV Sector
To foster self-reliance and sustainability within the electric vehicle sector, the government must take robust steps. EV companies are calling for increased investment in R&D, enhanced subsidies, and incentives for establishing EV manufacturing plants. Additionally, there is an urgent need for simplifying the GST structure and providing tax benefits on EV loans, which would alleviate financial burdens and encourage wider adoption of electric vehicles across India’s diverse market.