Friday, July 5, 2019

Decoding Budget 2019- My Takeaways for Automotive Sector- Electric Mobility


This budget has been in continuation of the intention of Government to go full throttle for Electric Vehicles Manufacturing and Ecosystem Development in the country. Madam FM clearly said that Government is aiming to make India a global hub of electric vehicle manufacturing.
Three major initiatives taken in this direction are following

1. Entry of New players

A new scheme has been proposed to  invite global companies through a transparent competitive bidding process to set up mega manufacturing plants in sunrise and advanced technology areas including lithium storage batteries, and charging infrastructure.

2. Incentive for the Buyers:

Income Tax benefit of Rs 1.5 Lac on the Interest paid on Purchase of EV as private buyers, who were earlier not considered for a subsidy through FAME 2 will be encouraged for Electric Vehicle purchase.

3. Support for Manufacturing ( EVs and EV components)

           A.      Decision on supporting EV manufacturing by extending benefits under Section 35AD(1).
           B.      Proposed GST Reduction on EV Manufacturing from 12% to 5%
           C.      Duty Reduction of Lithium Iron batteries from 5% to Zero
           D.      Extension of FAME 2 Benefits , 10,000 Crore for Hybrid and Electric Vehicle promotion  till  2022. ( Limited to Advanced Batteries and Registered Vehicles). It is aimed to support 10 Lakh two-wheeler, 5 Lakh three-wheeler, 55K four-wheeler, and 7K buses that operate on lithium-ion batteries or other electric power-trains.

Conclusion
In India, EV Penetration is just 0.06% while it is among top 3 Largest importer of Crude Oil in the world, So move towards adopting and promoting Electric Mobility is urgent need of hour. This budget has paved firm ground for the long journey of Electric Mobility in India by addressing multiple challenges lying ahead in the time of stagnant automotive Industry.

2 comments:

  1. There are companies trying to push them as lifestyle products as well. NYT Article

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  2. I think for automobile companies, its critical to look at the charging infra as well to get adoption going. Will be interesting to see what price points are chosen by respective companies.

    NISSAN has tried targeting the market from the bottom end but had limited success in US. May be companies should target tier 2 cities first if their offering is not spectacular where it is easier to set up infra. My sense is in Tier 1 people will tend to move to public transport.

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