EBM News
EBM News

Electric vehicle manufacturers seek easy finance, duty cuts in 2020 Union Budget

While the traditional Internal Combustion Engine (ICE) makers are pinning hopes on the Centre to consider reducing Goods and Services Tax (GST) on automobiles from 28 per cent to 18 per cent, Electric Vehicle (EV) manufacturers have their own set of demands. For the expansion of this environment-friendly mobility, EV players want provisions for easy finance, more localisation and policy intervention in the upcoming Union Budget.

“We expect the government to ensure that they instruct the retail banks to provide finance for EVs, perhaps at a lower rate than the ICE units. Retail finance is not easy for EVs; therefore, EV financing should fall under priority lending,” says Ayush Lohia, CEO, Lohia Auto Industry.

He also wants the Centre to refund the GST for whatever auto components the firms are currently purchasing. “GST on battery is 18 per cent currently, both on Li-ion and Lead acid. We request it to be reduced to 5 per cent,” he notes.

Jeetender Sharma, founder and managing director, Okinawa Autotech, wants cut in import duties of components. “The government has also fuelled the market with subsidies and incentives to accelerate adoption. However, the cost of components and import duty remains a big concern for EV manufacturers. Certain parts are still imported due to lack of manufacturing facilities. This forms a major part of the overall product cost,” he said.

Even as India has lined up an ambitious plan to promote EVs, the availability of top quality lithium-ion batteries remains a pain point for EV firms, since local manufacturing is yet to take off and they have to depend on China for imports. Beside this, several raw materials used in EVs such as nickel, cobalt and battery-grade graphite needs are imported.

To promote local manufacturing, the Centre had significantly hiked customs duty on imported products last year.

Ola Mobility Institute, in a note on its pre-budget expectations, said that as India marches to become a global hotspot for electric mobility, a critical step in that direction is recognising battery-swapping as a viable charging mechanism for two- and three-wheelers.

“This requires policy interventions such as including battery-swapping in FAME-II, treating EVs and batteries as separate entities and extending demand incentives for both, reduction of GST on Li-ion batteries and earmarking funds for R&D to develop batteries locally,” Ola said.