Budget 2024: Auto sector foresee key policy measures to drive growth, innovation and sustainability

While some industry leaders are seeking clarity on government incentives, a handful of them are counting on infrastructure development and tax reforms

As India emerges as a viable alternative for global auto majors to diversify their production base, the sector is looking at policies that are business-friendly, boost domestic manufacturing ecosystem, and is aligned towards economic growth of the country. As the industry undergoes a seismic shift towards electric mobility and sustainable practices, stakeholders are looking for measures that can accelerate growth and foster innovation in the Union Budget.

From well-established automakers to fledgling EV startups, the entire ecosystem is keen on the government’s long-term roadmap on EV adoption, promoting domestic value addition, supply chain challenges, R&D, infrastructure development, etc. While some industry leaders are seeking clarity on government incentives, a handful of them are counting on infrastructure development and tax reforms.

Society of Indian Automobile Manufacturers (SIAM) is urging for incentives to boost electric vehicles (EVs) and proposed additional benefits for vehicle scrapping in the upcoming Budget. Auto industry body emphasized the importance of a growth-oriented budget with increased allocation for capital expenditure. SIAM President Vinod Aggarwal highlighted the need for a policy akin to FAME 3 and expressed confidence in the continuation of effective schemes like Production Linked Incentive (PLI) schemes.

Some of the other anticipated measures include a comprehensive Battery Swapping Policy, the launch of FAME III, with an increased allocation for e-buses, and proposals to incentivize local production of EV components, all aimed at fortifying India’s EV ecosystem.

Society of Manufacturers of Electric Vehicles (SMEV) opines that in addition to encouraging personal EV ownership, specific measures to boost EV deployment in commercial use cases like shared mobility, taxis, and last-mile delivery would be beneficial.

R.K. Misra, President, SMEV noted that it will be essential to correct the GST disparity by reducing the GST on battery packs from 18 percent to 5 percent and lowering the applicable GST rates for public charging to encourage the rapid expansion of EV charging and swapping infrastructure.

In the upcoming Budget, the EV industry seeks a level playing field for all technologies, emphasizing the need to address disparities in GST and subsidies, particularly for swappable batteries.

“With electric bus penetration expected to double this fiscal year, the Budget should focus on encouraging innovations in battery technologies, without curbing advancements through standardization. The Budget should also extend incentives to fleet operators to integrate heavy and light electric CVs into their fleets. Efforts should be made to roll out EV infrastructure for fixed and swap technology-based vehicles on a PPP basis. These efforts will strengthen the EV infrastructure and enhance EV adoption and usage across the country,” said Chetan Maini, Co-founder and Chairman, SUN Mobility.