New Delhi, February 1, 2023:
In the 2023-24 Union Budget presentation, Finance Minister Nirmala Sitharaman declared that the Indian economy is seen as a “bright star” globally, with a projected growth rate of 7%. The government’s focus on infrastructure and the exemption of customs duties on capital goods and machinery imports for lithium-ion cell production will benefit the EV sector. Furthermore, the allocation of INR 35,000 crore for green growth, which is a top priority, will not only boost the economy but also support the growth of the EV industry as India works towards becoming net zero by 2070.
With blueprint drawn for India@100 the EV sector is all poised to be the sunrise sector that will drive the growth of the Indian economy.
EV Story reached out to various industry leaders for their perspectives on the budget and their thoughts and opinions on the budget on the allocations made to the EV sector.
Sohinder Gill, Director General, Society of Manufacturers of Electric Vehicles
“After passing through a difficult period of lack of good quality “Made in India” EV components for the last 2 years, the local supply chains are beginning to take shape, and the increase in customs duty on SKD/CBU is therefore timely as it will further incentivise the local suppliers because of the relative price advantage. There are still many parts of EV componentry such as lithium cells, permanent magnets for electric motors, semiconductors, etc that will need to be imported, and we expected rationalisation of customs duty on such essential imports to help keep the EV prices in check. The continuation of the customs duty-free status for machinery used to produce lithium-ion batteries could result in some stabilisation of battery pricing.
A “Green Credit Programme” to promote behaviour change has been announced as another intriguing proposal. We are awaiting the fine print and anticipate that it will support the creation and uptake of EVs.
Another great idea is to promote hydrogen as a future fuel, especially since India has an abundance of sunshine most of the year and the majority of our goods are transported in heavy-duty trucks that cannot run on lithium batteries efficiently or cost-effectively. We believe both hydrogen and Lithium batteries can co-exist as great clean fuels for the energy and transportation needs of the next few decades.”
Vinod Aggarwal, President, SIAM and MD & CEO, VECV
“33 % increase in capital outlay with an effective provision of Rs 13.7 lakh crores will spur growth in the economy resulting in positive impact on the Auto sector.”
Adding further, he stated, “The Auto industry is fully aligned with the initiatives on Sustainability and Decarbonisation and increased focus on Hydrogen, Ethanol Blending, Bio Gas, Electric Vehicles and Battery Storage. Announcement for funding various Government Departments for replacement of old vehicles is also commended.
Another appreciable feature of the budget is putting more money in the hands of the individuals by some lowering of effective personal income tax rates that should increase consumption and consequently lead to more demand. All in all, this is a growth-oriented budget with positive impact on the Auto Sector.”
Dr. Anish Shah, Managing Director & CEO, Mahindra Group
“This is an outstanding budget as it is disciplined, growth-oriented, inclusive and sustainable. The Finance Minister has done a commendable job by tabling a budget that is big on consistency and driven majorly by capex. The steep increase in capex, to the tune of Rs 10 lakh crore, will ensure the continuum of cyclical recovery. Capex spending is good because it has a higher multiplier effect: every rupee spent on capex has a multiplier of Rs 3 as compared to just about Rs 0.9 for revenue expenditure. That apart, higher capex also creates jobs in the hinterland. The focus on core infrastructure, including increased funding for railways and clean energy, as well as the government’s ambitious plans for the agricultural sector, will help to improve rural incomes. Above all, it is encouraging to see the government setting the pace for climate action by announcing a “green budget” that will pave the way for a greener, cleaner planet.”
Sunjay J Kapur, President ACMA
“The budget is a blueprint of a digitally enabled, Aatmanirbhar Bharat, coupled with measures that will drive sustainable yet inclusive growth at a rapid pace. Focus on exports, manufacturing, local value addition and encouraging green energy and mobility are indeed steps in the right direction. Further, the proposals for personal Income Tax will put more money in the hands of people thus fuelling consumption leading to economic growth.”
“ACMA is also delighted by the measures announced for skilling and research in hi-tech areas such as AI, Robotics, 5G, Mechatronics and 3D printing, among others. With increasing telematics and software content in vehicles, these measures will ensure that our industry continues to be relevant and globally competitive”.
Mahesh Babu – Chief Executive Officer Switch Mobility Ltd.
“The government’s focus on infrastructure with enhanced capex of INR 2.7 lakh crore for roads and highways and the budgetary allocation for vehicle scrappage, will certainly accelerate the growth of the CV market in India. Meanwhile, in the EV sector, the government’s move to provide customs duty exemption for import of specified capital goods and machinery required for manufacture of lithium-ion cells for batteries is a welcome move, that will play a vital role in making local cell manufacturing cost competitive in the long run. Additionally, green growth being one of the top 7 priorities, with an allocation of INR 35,000 crore, is a step in the right direction. This will not just aid economic growth but will also accelerate the growth of the auto industry, especially EVs, as the country transitions towards net zero by 2070.’’
Ayush Lohia, CEO, Lohia Auto
Budget 2023 is extremely supportive of the auto industry as India moves forward with the EV revolution. While the capital investment of Rs 10 lakh crore in infrastructure spending will unquestionably help CV sales, the goal of scrapping all old government vehicles by assisting state governments will increase sales across all segments.
In addition, the struggling entry-level 2W and PV markets will benefit from the lowering of individual tax slabs. Sales of premium vehicles will also benefit from the reduction of the maximum tax levy from 37% to 25%. With an emphasis on electrification, lowering import taxes on lithium ion batteries will help lower the cost of EVs and make them more accessible to the general public.
The updated credit guarantee scheme is also welcome news for MSMEs, who are still adjusting to the effects of the pandemic. It will go into effect on April 1st, 2023, with a corpus injection of Rs. 9000 crore. This will allow for an additional Rs 2 lakh crore in collateral-free credit guarantees, which will allow for a 1% reduction in the cost of borrowing.
Also, the minimum tax slab has been raised to Rs 7 lakh in the new tax regime; this rejig could help bolster disposable income, boosting consumption across segments, including EVs.
Rajesh Jejurikar, Executive Director (Auto & Farm Sectors), Mahindra & Mahindra Ltd
“The Budget has struck the right balance between managing growth and fiscal prudence. The reduction in income tax and other taxes will put more money in the hands of consumers, driving consumption and growth in the economy . The Government’s focused investments in infrastructure will support long term sustainable economic growth. The budget enhances the positive sentiment in the country when the global environment has uncertainty.”
Manav Kapur, Executive Director, Steelbird International.
Finance Minister Nirmala Sitharaman has tried to stimulate the auto sector of India with some smart moves in the Union Budget 2023-24. First of all, this budget paves a smooth path for the EV transition by extending the customs duty exemption to import of capital goods and machinery required for manufacture of lithium-ion cells for batteries used in electric vehicles. Whereas measures announced for skilling and research in AI, Robotics, 5G, Mechatronics and 3D printing will trigger quality production across the sectors, and the auto components industry will also benefit from incorporating these cutting-edge technologies in various operations. On the other hand, the rebate limit on personal income tax has been increased from ₹5 lakh per annum to ₹7 lakh per annum; this initiative will directly affect the demand side with the better purchasing power of potential customers. Moreover, the announcement of replacing old government vehicles will further enhance demand for new vehicles. So, overall it is a smart budget where due attention is given to all the major sectors.
Mr. Ketan Mehta, CEO and Founder, HOP Electric Mobility
India’s fastest growing electric 2-wheeler manufacturer, says “A largely all-encompassing inclusive budget offers something to cheer about for all sectors; emphasis on rural development – where resides the real BHARAT, and Green sustainable climate consciousness is growth focused for a bright future. The Budget will drive economic growth, create jobs and attract investments. Pushing investments in sectors such as agriculture, fishery and cattle, and supporting procurement of components for electric vehicles, and focus on clean energy and fuels like Hydrogen will significantly enhance the prospects of segments that were in need of attention.”.
Kapil Shelke, Founder & CEO, TORK Motors
“The changes in the Income tax slab structure has enhanced the purchasing power of the populace. This move will encourage the adoption of cleaner, cost effective means of travel for their daily commute and the availability of FAME-II subsidy will further boost the sales of electric vehicles in the coming fiscal. Additionally, the extension on customs duty on the import of capital goods and machinery for developing lithium-ion cells would also enable EV manufacturers to localise their products in the long term, leading towards reduction in the cost of an electric vehicle for the consumer in the years to come, particularly for a brand like ours that are 95% indigenously manufactured in India.”
Stefano Sanchini Managing Director, Bridgestone India
“The Government’s proposal to increase the capital expenditure outlay by 33% is a welcome move as this will directly impact the logistics and mobility sectors. These sectors would also grow as they expand to serve the enhanced demand for goods generated by new infrastructure projects. The Finance Minister’s statement on replacing old government vehicles will increase the demand for new vehicles and we are committed to supporting the OEMs meet this demand.”
Kaustubh Dhonde, Founder & CEO of AutoNxt Automation
The Union budget clearly shows the commitment of the central govermment to achieve the net zero emission goal of 2070. The budget expectations that we had from EV industry perspective will completely be met if the implementation of the budget is done properly at grass root level. Both the incentives and packages defined for Agritech and EV related innovations in the country are truly promising to expect high growth from the rural to the urban areas.
Startups/MSME’s working in these two areas are the real catalyst for the growth of the entire nation, so it will be interesting to look at how smoothly they are provided access to the
