The automotive industry goes vocal about its expectations from the upcoming Interim budget
Update: A deeper look at the Budget 2024 and its impact on automotive industry
The Indian automotive industry is eagerly awaiting the Interim Budget 2024, on Feb 1. With the wheels of change turning fast, the upcoming budget could bring in winds that could potentially steer sales and cash flow. A lot is being discussed in pre-budget expectations. Leading automakers, OEMs, and related businesses have their wishlists prepped and ready.
To give you a quick picture, we’ve compiled this list of pre-budget quotes and expectations from leaders of various leading automotive brands and OEMs in India. This article will be updated with more leader inputs…
“As anticipation builds for the upcoming finance budget, the electric vehicle (EV) industry is poised for transformative reforms. Advocating for a streamlined Production-Linked Incentive (PLI) scheme, stakeholders seek clarity in provisions to encourage investment and growth. The call extends to widening the scope of the FAME II scheme, fostering innovation in diverse EV segments.
Mr. Nikhil Bhatia, Co-Founder & Chief Strategy Officer – HOP Electric Mobility
A crucial focus lies on incentivizing in-bound technology transfer and manufacturing capabilities, positioning India as a global EV technology hub. Anticipating the central role of lithium-ion batteries, we urge GST reform for increased cost-competitiveness. Charging infrastructure development, especially through public-private partnerships, is deemed pivotal for accelerated EV adoption.
Moreover, the promotion of universal battery charging and swapping infrastructure aims to simplify the user experience and standardize EV charging. The forthcoming budget is anticipated to lay the foundation for a sustainable, technology-driven future in Indian mobility, aligning with global EV trends.”
“For India’s electric vehicle revolution to truly shift gears, three factors must align: affordability, accessibility, and sustainability. Affordability hinges on continued government support: Reduced GST on lithium-ion batteries and the introduction of FAME 3 with clarity on subsidy of electric trucks, alongside domestic battery manufacturing and skilling initiatives. Accessibility demands a robust charging infrastructure that reaches beyond metros, powered by clean energy sources and bolstered by open data standards for seamless charging. Sustainability, a focus on responsible end-of-life battery management, with R&D in recycling and circular economy measures leading the way. Prioritising these pillars is the only way India can unlock the true potential and adoption of electric vehicles.”
Uday Narang, Chairman, Omega Seiki Mobility
“Further, amped-up R&D funding can lead to lighter, safer batteries being manufactured in India. Thus, lowering operating costs for logistics fleets, while extending kilometre range and boosting performance. Finally, we urge for a clear, stable policy framework, including a program incentivising the replacement of polluting vehicles with electric alternatives, accelerating sustainable transportation adoption and providing a predictable environment for long-term planning and investment in fleets. With these measures, we can work with the government to curb carbon emissions and ignite robust economic growth, powered by safe, smart and sustainable logistics solutions.”
Maxson Lewis – Managing Director & CEO at Magenta Mobility
“The upcoming interim budget, coinciding with elections, will set the tone for the government’s future plans. The 2024 budget is crucial for aligning tire manufacturing and EVs, steering the industry toward innovation and sustainability. The tire industry hopes for strategic allocations that drive innovation in durable and eco-friendly tires. Simultaneously, the EV segment would expect incentivising development of the ecosystem, including charging infrastructure investments, and research support, fostering a greener automotive landscape.”
“India faces challenges in rubber production, with high duties on natural rubber. Adjusting duty rates is vital for cost competitiveness. Rising raw material costs and reliance on imports impact profits. Encouraging research, local sourcing under ‘Make in India,’ and adjusting duty structures will boost global competitiveness and sector resilience.”
Mr. Harinder Singh – Managing Director & CEO, Yokohama India
“Embracing a sustainable future requires bold steps, and in the upcoming budget, I advocate for a visionary approach towards renewable energy adoption. Investing in renewable energy infrastructure is not just an environmental imperative; it’s an economic opportunity that can power our nation forward.
Mr. Sameer Aggarwal, CEO & Founder – Revfin Services
In the drive towards a greener tomorrow, the government can catalyze change by incentivizing renewable energy projects and R&D initiatives. By allocating resources to enhance solar and wind power capacities, we not only reduce our carbon footprint but also fortify our energy security.
Crucially, as the electric vehicle revolution gains momentum, integrating renewable energy into the national grid becomes paramount. A strategic allocation in the budget for renewable energy will not only power homes but also fuel the burgeoning electric vehicle segment. By creating an ecosystem where clean energy sources power our transportation, we pave the way for a sustainable and resilient future.
We envision a budget that aligns economic growth with environmental responsibility, driving the nation towards a future where renewable energy propels both our homes and our vehicles. It’s not just an investment in power; it’s an investment in a cleaner, brighter tomorrow for generations to come.“
“As we anticipate the 2024 budget announcement, we hope for a forward-looking budget that reflects India’s commitment to sustainability and technology advancement. A large volume of India’s end-of-life Lithium-ion batteries is exported globally for recycling or just processed as an intermediate black mass and then exported. Hence, massive R&D investments are required, particularly to create strong competencies and lab testing facilities for the proper end-of-life Lithium-ion battery recycling. This not only contributes to responsible environmentalism but also nurtures a talented pool of individuals.
Mr. Shubham Vishvakarma, Co-Founder, Chief of Process Engineering, Metastable Materials
Another area, where we are hopeful for is the Production-Linked Incentive (PLI) and it’s extension to battery recycling. This would also be a strategic approach as by expanding the range of the scheme beyond just the Advanced Chemistry Cell manufacturing, we open up the opportunity to capture the entire value chain. This extension will incentivize the setting up of homegrown recycling firms instead of shipping away the dead batteries.
We also recommend that the recycling of Lithium-ion batteries be incorporated into the Carbon Credit Trading Scheme. This inclusion, in particular for negative-value battery chemistries feasibility will provide substantial support to India’s position in the carbon credit markets and also demonstrates our continued dedication to sustainable solutions.”
“One of the most anticipated schemes to be continued is the FAME II subsidy (Faster Adoption & Manufacturing Electric Vehicles). This subsidy was announced in 2019 having a validity for 3 years. It is expected that the govt will continue this for the next few years in response to decarbonising the environment and achieve the targets of net 0 goals.
Along with this, there is a proposal to reduce the GST on the Li-ion batteries from 18% to 5% overall, reducing the cost of acquiring EV’s. Since batteries are a major cost component in EV’s, the move to reduce the cost of batteries will make the product more lucrative for buyers.
Over the past 5 years the government has focused a lot on building strong infrastructure. It is expected to continue improving and make efficient investments in energy, especially green energy and sustainable energy. The focus is on transitioning from carbon dependent to energy efficient policies. The new transport policies being adopted by the state govt is a testament to this shift. Many state transport authorities have announced the conversion of Petrol/Diesel cabs be converted into EV’s by the end of this decade.
We look forward to EV financing getting priority sector lending status as the government’s ambitious target of 30% penetration to be achieved by 2023.”
Mr. Mayank Bindal, Founder & CEO, Snap E Cabs
“Despite last year’s commendable 33% surge in EV registrations, our industry encounters persistent challenges. Chief among these hurdles is the imperative need for robust charging infrastructure, pivotal in inspiring confidence among potential buyers and propelling the widespread adoption of electric vehicles (EVs) as a sustainable mode of transportation.
Another barrier remains the relatively higher initial cost of EVs, often deterring consumers. However, the promise of life tax subsidies for electric vehicles and the availability of accessible EV financing options hold immense potential to mitigate this challenge.
The integration of EV infrastructure into Priority Sector Lending (PSL) is poised to bolster credit flow into the sector by mandating financial institutions to provide support, thus promising a significant boon.
A supportive regulatory framework coupled with financial incentives aimed at fostering research and development within the EV sector stands as indispensable pillars. These measures not only drive innovation but also attract investments, creating an environment conducive to widespread EV adoption.Mr. Manideep Katepalli, Co-Founder, BikeWo
Ultimately, these strategic initiatives play a pivotal role in establishing an enduringly sustainable and eco-friendly transportation ecosystem.”
“The upcoming budget holds a pivotal role in steering India towards a sustainable future by fostering the growth of battery recycling. The circular economy’s cornerstone, battery recycling, addresses mineral scarcity and reinforces our supply chains, paving the way for self-sufficiency in battery materials. While regulations like the Electronics Waste Management Rule and Batteries Management Rule have strengthened the recycling industry, persistent challenges call for solutions. To further empower this sector, streamlined recycling policies and incentives for pioneering waste management solutions are imperative.
The rapidly growing adoption of electric vehicles is a catalyst for the EV battery recycling industry. Initiatives such as FAME, PLI, and other incentives should be amplified to fuel this momentum. A tailored PLI scheme dedicated to lithium-ion battery recycling will be a game-changer, amplifying the sector’s growth while advancing India’s sustainability goals. As we approach the budget, investing in these strategic measures will not only invigorate the recycling industry but also cement India’s position as a global leader in sustainable practices.”
Mr. Rajesh Gupta, Founder & Director at Recyclekaro
“The anticipation is that the government will incorporate the Electric Vehicle (EV) sector into Priority Sector Lending (PSL), facilitating more accessible financing options for both personal and commercial electric vehicles. Additionally, there is a hopeful outlook for policy initiatives aimed at advancing EV adoption. This includes the extension of subsidies to enhance the affordability of electric vehicles and the implementation of incentives for conversion kits, encouraging the transformation of Internal Combustion Engine (ICE) vehicles into Electric Vehicles (EVs).”
Samarth Kholkar, CEO and Co-Founder, BLive
“As we anticipate the Interim Budget 2024-25, we recognize the pivotal role it plays in shaping the economic landscape, particularly for the two-wheeler auto industry. The potential benefits that could arise from individual taxation reforms hold promise for our industry. With the government’s focus on stimulating consumer spending, the possibility of tax incentives or reductions could significantly boost the demand for pre-owned two-wheelers.
Additionally, the recent announcement by the Reserve Bank of India (RBI) maintaining the current repo rate is noteworthy. The stability in the rates provides a favourable environment for financing options, making two-wheeler ownership more accessible to a broader consumer base. This aligns with our mission to enhance mobility solutions for individuals across diverse economic backgrounds.
Furthermore, we look forward to potential initiatives in the budget that encourage sustainable practices within the automotive industry. Our commitment to quality refurbished vehicles aligns seamlessly with the vision of a resilient and progressive two-wheeler auto industry. With an eye on the budget, we remain optimistic about collaborative measures that will propel our industry forward. Together with our dedicated team, strategic partners, and a customer-centric approach, we stand ready to embrace the evolving landscape and capitalize on the opportunities that the upcoming budget may unfold.”
Narayan Karthikeyan, Founder & Managing Director, DriveX
“Currently Pre-owned luxury cars attract a staggering 110% GST & 100% excise duty on imported CBU units, which is a major deterrent to imports. Reducing these taxes would make imported cars more affordable and accessible to consumers and help boost domestic market competition.
The Ministry of Road Transport and Highways (MORTH) has initiated an initiative to facilitate the online transfer of ownership for pre-owned vehicles. However, the period required to transfer the ownership is very tedious. We request the government to expedite the implementation of this portal to improve transparency and confidence in the pre-owned vehicle market“
Mr. Himanshu Arya, Co-Founder & CEO, Luxury Ride
“As we anticipate the forthcoming Union Budget, we are eagerly looking forward to policy initiatives that will drive the green mobility agenda and foster sustainable practices. The country experienced a remarkable surge in Electric Vehicles (EVs) last year, and this can be attributed to the government’s proactive policy initiatives and support to energy transition and to EV acceleration, in particular.
As we welcome the Union Budget 2024-2025, we are optimistic that the GoI will announce continued support to support demand for EVs with the announcement of FAME III scheme. FAME scheme of GoI has been instrumental in reducing the price differential between EV and ICE vehicles, and thereby spurring demand from customers for EVs. This scheme has been the most successful demand generation incentive and the success of it can be seen in growing interest in and adoption of electric 2W and electric 3W from customers across the country. With help of Fame II, a large number of electric buses have been ordered and deployed in our cities, thereby reducing the menace of pollution.
Thus, the most important expectation and demand from EV sector in the Union Budget 2024 is the continuation of demand incentive schemes for EVs with FAME III scheme. We strongly feel that if FAME II demand incentive scheme is suddenly discontinued in March 2024, there by leading to a significant increase in prices of EVs, it will lead to reduction of demand and as a country, we will lose momentum we have garnered towards a rapid transition to green transport. It may also lead to higher imports and loss of gains in Make in India for electric vehicles and their components. A clear and consistent demand generation roadmap is critical for continued and enhanced investments in e-mobility.”
Further, including Electric vehicle financing under Priority Sector Lending will help to provide impetus for affordable financing for EVs. We also request Government to create a strong export incentive policy for export of EVs, thereby encouraging local manufacturing of EVs for global markets. We anticipate policies that align with global sustainability objectives and position our country as a leader in the transition to electric mobility. Moreover, we are hopeful for a reduction in GST rates from the current 18 percent to 5 percent on lithium-ion batteries. This move by the GoI will bring about a positive impact on the EV industry.
The upcoming 2024 budget is poised to mark a significant transformation for the electric vehicle industry. The industry eagerly anticipates a budget aligned with sustainable and net-zero development goals, fostering the growth of the electric vehicle sector, and contributing to a greener and cleaner future for India.”
Sulajja Firodia Motwani, Founder and CEO, Kinetic Green
“The government at the center has a lot of focus on the growth of the EV Industry as a whole, but the same commitment needs to be showcased by the state governments as well. For example, in Gujarat, we are paying double RTO charges as compared to other states for the EV vehicles which makes it an expensive as well as a less preferred option. There should be standardised norms all across the states for equal opportunities of growth pan India.”
Pragya Mittal, Co-Founder and Director, EVIFY.
“As India grows to become a $5 trillion economy, inspired by our Honourable Prime Minister Shri Narendra Modiji ‘LiFE: Lifestyle for Environment’ mantra at COP26, we see a timely opportunity to shift the paradigm of our personal mobility. Over the years, the government’s economic initiatives have increased disposable income, making it the right time to prioritise efficiency over size in personal mobility. Indigenous EV-cycles, powered by Indian technology, have the potential to redefine mobility, realising our dream of ‘har ghar ek electric cycle,’ reducing the country’s oil consumption similar to how LEDs transformed energy use. We anticipate the budget will further empower consumers to align choices with ‘Lifestyle for Environment,’ confident that India will lead in redefining personal mobility with EV cycles as the preferred choice in the coming years.”
Mr. Atulya Mittal, Founder, Nexzu Mobility
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