How The Union Budget ‘2023 Will Fuel India’s Rising EV Ambition And Financing

A file photo of Nehal Gupta, the Director of AMU Leasing

The EV (Electric Vehicle) industry in India has exhibited phenomenal growth over the years. Notably, the Indian automobile sector at present is positioned at 5th rank on the global automobile landscape and is expected to elevate to 3rd position by 2030. The indispensable importance of the EV industry in India can be determined by the fact that the domestic EV market is anticipated to grow exponentially at 49 % CAGR (Compound Annual Growth Rate) by 2030. The mercury of the EV financing sector which comprises numerous Neobanks, NBFCs (Non-Banking Financial Company), financing firms etc. is soaring high in India. The nation’s EV Financing industry is expected to reach a worth of $3.7+ trillion by 2030. The government has duly honoured the EV sector in the financial budget ‘2023-24 by introducing favourable regulations that will help the stated ecosystem thrive multifariously.

Tax exemptions to promote the EV industry: It is evident from the guidelines introduced in the fiscal budget ‘2023 that the government is inclined to increase the adoption of EVs on the mass level. During the recent budgetary session, the honourable finance minister made numerous significant announcements regarding India’s automotive industry and expanding the electric mobility sector. The encouragement of the production of biogas and hydrogen, as well as tax concessions on capital goods imports connected to electric vehicle batteries, were the key areas of emphasis in the recent budget in terms of green mobility.

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Special endeavours to enhance the EV sector: The illustrious players and prominent enterprises from the EV industry are delighted with the prospects of the new rebates that have been incorporated in the federal budget ‘2023. The government has decided to exempt the capital goods and machinery needed to manufacture lithium-ion cells for batteries used in electric vehicles. According to the finance minister, the mentioned endeavour will encourage the adoption of cleaner transportation options across the nation. Faster adoption of EVs will result from the reduction of indirect taxes from 21% to 13% as well as the exemption of customs duty on capital goods and machinery needed for the manufacture of lithium-ion cells. A further year has been added to the subsidy period for EV batteries. The stated initiative will accelerate the country’s EV adoption manifolds.

Dynamic policies: It must be accentuated that the monetary budget has aptly announced the policies that are aimed at fortifying the landscape of the EV sector in India. The diligent budgetary framework will encourage the participation of women and various social groups in EV mobility streams. It is commendable to witness that the GST on various EV components has been decreased as this will support the integration of sustainable energy into value chains and boost the EV industry in tier-2 and tier-3 cities nationwide. The budget has added the green credit programme to strengthen the corporate and individual capacity of sustainability and environmental awareness coupled with a significant capex spur of 30% to further improve the EV industry in the country. As per the market experts, the current budget will motivate numerous startups to venture into the EV industry. With the assistance of multifaceted guidelines introduced in the financial budget, the EV industry is anticipated to generate numerous employment avenues, thereby, boosting the nation’s economy.

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The Union Budget ‘2023-24 with its niche regulations will transcend the EV industry in India to a new level of success in the forthcoming fiscal year.

By Nehal Gupta
The author is the Director of AMU Leasing Pvt. Ltd.

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