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    What the EV Ecosystem Expects from the Upcoming Budget in 2023

    India’s expanding EV market is anticipating the impending 2023 budget, which will be delivered by Union Finance Minister Nirmala Sitharaman on or before February 1, 2023.

    A number of benefits, including the continuation of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME-II) scheme beyond 2024 and a reduction in GST, are anticipated by the EV industry (including ancillaries).

    Tax Breaks

    According to Chetan Maini, Co-Founder, and Chairman of SUN Mobility, “the EV sector wants the GST on ACC (Advanced Chemistry Cell) batteries to be decreased and brought to parity with EVs (5 percent)”.

    The use of electric two-wheelers (E2W) is expanding quickly, and India is expected to have one of the largest two-wheeler markets worldwide. A total of 18,47,208 two-wheelers were sold in India in November 2022; 76,438 of those (4.1%) were E2Ws.

    Zypp Electric thinks that the GST for last-mile delivery services needs to be cut in order to increase that.
    According to Akash Gupta, co-founder, and CEO of Zypp, “my major pain point right now is that the use of EVs is growing in the last-mile delivery market, like Zomato, Bigbasket, Amazon, etc., yet we have a GST of 18 percent with no incentives.”

    “In the next two years, I can convert the whole last-mile delivery sector to electric vehicles. But scaling up is proving to be challenging. We anticipate that the GST would be eliminated in the upcoming budget, the official said.

    The promotion of electric vehicles was a major focus of the 2022–2023 budget. Under FAME-II, cash incentives totaling Rs 10,000 crore were given to increase demand. PLI (production-linked incentive) programs of Rs 44,038 crore, including ACC batteries, had been announced to support supplies.

    Commercial Adoption of EV 

    According to Inderveer Singh, founder, and CEO of the commercial EV company EVage, India must seek to expand the commercial EV market as well.

    “In order to promote swift adoption in the E4W category, the government needs to take into account commercial EV funding. Lower interest rates for EV finance and consistent remaining battery value calculation are required instead of subsidies (what is this & how does it impact the industry). The removal of these obstacles will greatly benefit fleet owners, Singh continued.

    The market for electric light commercial vehicles, which is currently between 3,50,000 and 400,000 units, is anticipated to rise by 7 to 10 percent a year until 2025. This market is primarily driven by logistics and e-commerce companies, who are electrifying their first and last-mile fleets to cut costs and comply with ESG standards.

    The founder of Ola Electric, Bhavish Aggarwal, told the media that the company would concentrate on producing motorbikes, releasing lithium-ion batteries, and foraying into the commercial vehicle (CV) market in 2023.

    He stated, “Our investment priority for 2023 will be on motorcycles, lithium-ion cells, and light commercial vehicles (LCV).” “Four-wheelers and recommendations for fast-charging infrastructure are typically absent from state EV programs. To energize the commercial EV sector in 2023, a rapid shift to this is required, Singh continued.

    Amplification of FAME-II for EV

    Additionally, EV companies anticipate that the government will adopt a long-term perspective and prolong the program’s validity past 2024. Such policy consistency, according to Sachidanand Updadhyay, MD and CEO of Lord’s Mark Industries, a company that deals in EV infrastructure, “would gradually enhance EV adoption in the country.” According to him, the budget was expected to provide incentives for upgrading gasoline and diesel vehicles with electric kits in order to hasten the adoption of EVs. Additionally, Upadhyay stated that there was a pressing need to increase public awareness of the vehicle scrappage policy in order to promote the retirement of old cars and boost EV sales.

    According to data, the percentage of electric vehicles (EVs) among all newly sold vehicles crossed the 3 percent threshold for the first time in November, and by 2023, that percentage may exceed 5 percent. There is evidence that, globally, EV sales soar once they reach the 5 percent mark.

    Assistance to SMEs

    For inclusive growth, Upadhyay continued, “the government needs to ensure a level playing field for MSME operators in the EV sector.” According to Maini, MSMEs that produce or assemble ACs, battery packs, and charging and battery-swapping equipment should be included in the PLI scheme. Singhvi suggested that greater subsidies were needed to help EV finance when he discussed investments in EVs. “Sops differ from state to state, and this has to change. Only until NBFCs are encouraged to finance EVs will growth occur” said Singhvi.