Whats there for EV industry in budget 2023

What’s there for the EV industry in budget 2023?


We have seen an increase in EV demand over the previous few years. The technology has gained consumer acceptance, and the sector is prepared to take off. The government has consistently demonstrated its dedication to advancing and emphasizing electric mobility. The FAME plan, one of its initiatives that places a strong emphasis on demand generation, has given the industry the proper foundation. However, due to the industry’s infancy, the lack of resources to draw investment, and COVID, other initiatives including R&D for localization, supply-side assistance, charging infrastructure, and consumer awareness programs were unable to gain traction. Therefore, we must concentrate on creating a robust EV ecosystem at this time so that the EV business can become self-sustaining. No policy, in our opinion, can be static; rather, it must be dynamic to take local circumstances into account as it is being put into practice. The government could take the following actions in the Union Budget 2023–2024 to help the Indian EV industry achieve its goal of being a worldwide hub. Let’s have a look at what there is for the EV industry in budget 2023.

Budget 2023 synopsis

Nirmala Sitharaman, the minister of finance for the Union, delivered the Union Budget 2023–2024 to the Parliament. Although the market for electric vehicles has seen growth, the Budget lacks the long-term perspective necessary to support it.

The FM announced the renewal of the concessional tariff for EV batteries as well as the doubling of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme II fund.

As part of a bigger initiative to create EV battery cells in India, the customs duty on lithium-ion batteries has been decreased from 21% to 13%. This action will benefit manufacturers of EV battery cells.

In May 2021, the government unveiled a production-linked incentive program for EV battery cell producers, to produce them in India so that they would be less expensive and more readily available to OEMs there.

EV spare parts are subject to a high Goods and Services Tax (GST), a problem that has not yet been resolved, despite the Budget’s decision to quadruple subsidy monies to stimulate demand generation. While EVs only pay 5% GST, EV spare components (excluding batteries) are subject to a 28% tax.

All India EV Monthly Magazine: Jan-23 Edition

Increased funding under the FAME II program is a very positive step, and it is clear that the Indian EV market needs much more time to develop. The Indian EV industry will therefore need longer-term support; the one-year extension of the subsidies would not be sufficient.

The Budget does not include any incentives related to research. Given the limited and monopolized source of lithium that exists now, India needs research to create domestically produced, inexpensive machinery in addition to technology.

It would have been preferable to see research and development on battery technology and machinery that was motivated by self-sufficiency.

The Budget could have been “smarter” when it comes to EVs and ignores a long-term vision for the sector in India.

“This year’s union budget looks highly promising. The Agenda of introducing strict guidelines to eliminate ELVs, with the series of green mobility programs the government is planning to focus on, will surely change the face of sustainable mobility in India. No customs duty on Lithium batteries is going to be one of the key growth drivers for the industry. With various other supporting financial reforms, EV is certainly set to penetrate across nooks and corners”: Dr. Yogesh Bhatia

What’s there for Battery manufacturers and EV manufacturers?

Indian market is moving towards Made-in-India EVs, also the government has reduced the GST on lithium batteries. This will help India to grow its in-house EV manufacturing ecosystem.
1 year extension of the duty-free importation of lithium-ion cells for EV batteries will help increase the adoption of EVs in 2023. Similar to this, the basic exemption from customs duties on the raw materials needed to manufacture the nickel cathode used in batteries has also been maintained.

The Union Budget for 2023–2024 places a significant emphasis on sustainability and green growth. India’s determination to reach Net Zero by 2070 is progressed by the “Green Growth” priority sector. The government has given the EV industry infrastructure status, facilitating better finance access for businesses that produce EV components. As a result, production prices will go down, and India’s manufacturing capacity in this industry would increase. More individuals will shift from petrol/diesel automobiles to electric ones thanks to the recently announced program to scrap old cars and replace outdated, polluting ICE vehicles.

With a focus on green growth and green fuel, the Indian government is dedicated to introducing green mobility solutions like e-rickshaws, e-bicycles, and other clean energy transportation systems in cities all across the nation. We are happy that the Union Budget 2023 contains such projects.

“We welcome Budget 2023-24 and the government’s dedication to promoting environmental sustainability, as stressed by Finance Minister Nirmala Sitharaman. The announcement of the extension of subsidies on Electric Vehicle batteries for 1 more year coupled with the decision to continue the concessional duty on lithium-ion cells for batteries for another year is helpful; however, we look to the government to extend these for 3 years to provide a stable policy environment for the industry.”: Dr. Amitabh Saran- Founder and CEO, Altigreen