Budget 2023 Wishlist: EV Makers Seek Policy Tweaks

India's electric vehicle industry does not expect big shake-ups in Budget 2023, barring a few policy tweaks, as bigger interventions have already taken place through various incentive schemes for greater adoption.

Several industry executives asked for a continuation of the policies that are already in place or under implementation. The schemes include the Production Linked Incentive, and Phase II of the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India.

"I feel the government has made all the right steps with schemes, such as (the) PLI and FAME-II. Our only ask in the budget is a standardisation of (the) GST," Sunjay Kapur, president of the Automotive Component Manufacturers Association of India, said.

The Society of Manufacturers of Electric Vehicles echoed this demand in its recommendations for the budget.

The industry body pointed out that while 5% GST is levied for the vehicle, there is no clarity for spare parts and the sector ends up paying 28% GST, except for batteries.

"The request, therefore, is for levying a uniform 5% GST for all EV spare parts," it said.

However, a continuation of policy will also mean an extension of FAME-II scheme beyond the financial year 2023-24, which seems an unlikely scenario as several scheme beneficiaries are under scanner due to allegations of subsidy misappropriation.

The complaints are mainly related to the violation of Phased Manufacturing Programme guidelines under FAME India Scheme Phase-II.

All the complaints have been referred to the testing agencies for re-verification. After examination of reports against two companies, their models have been suspended from the FAME scheme, Heavy Industries Minister Mahendra Nath Pandey had informed the Lok Sabha last month.

But it hasn’t stopped the SMEV to seek an extension of the scheme beyond the current deadline.

The FAME-II scheme should be linked to penetration of such vehicles instead of being deadline-based, it said in its list of recommendations.

Industry participants believe the electric two-wheeler industry will take at least 24-36 months before it can stand on its feet.

"I think still electric mobility is a very nascent kind of a segment in India," Sanjay Behl, chief executive officer at Greaves Electric Mobility Pvt., told BQ Prime.

"It needs regulatory and fiscal support for at least two–three years to really mature to a level after which it becomes autonomous."

Other than the incentives given by the government to encourage production and demand for EVs, the industry is hoping for greater focus on research and development for localisation, supply-side support and charging infrastructure.

"It's important at this juncture that we focus on building a strong EV ecosystem that could make the EV industry self-sustainable," the SMEV said.