Ahead of the 2024 Union Budget that will be presented by Finance Minister Nirmala Sitharaman on February 1, the electric vehicle (EV) two-wheeler industry is pinning hopes on a strong push for green mobility through EV incentives like the Fame III scheme and more capex allocation for research and development.
“With FAME II about to end, we expect the government to announce the next leg of the FAME scheme so that citizens can continue getting more affordable vehicles,” said Sohinder Gill, director general of the Society of Manufacturers of Electric Vehicle (SMEV) and CEO of Hero Electric.
The FAME India Scheme is a government subsidy scheme under the National Electric Mobility Mission Plan (NEMMP) and stands for Faster Adoption and Manufacturing of Electric Vehicles in India.
Currently, Phase II of the FAME India scheme is being implemented for five years from April 1, 2019, with a total budgetary support of Rs 10,000 crore which is expiring on March 31, 2024.
The electric two-wheeler industry was hit following the changes in the Fame II subsidy scheme. June's sales came down drastically to 46,000 units as against 1.04 lakh units retailed in May.
As per VAHAN data, total electric vehicle retail sales in 2023 accounted for around seven percent of total automobile sales in the country.
The industry is hoping for more government incentives to increase and accelerate two-wheeler EV adoption in the country.
“We expect the government to come up with an approach that will be beneficial in uplifting the EV industry in the coming decade. Permitting the inclusion of electric vehicles in priority sector lending would lower financial costs, potentially fostering greater adoption of these vehicles. The government could implement measures so that India can create an Atmanirbhar EV ecosystem,” Gill added.
The Union Budget 2023 had many benefits for the EV industry like the continuation of concessional duty on components of lithium-ion batteries and reduction of indirect taxes from 21 percent to 13 percent.
The budget also had the announcement of the Production-Linked Incentive (PLI) Scheme with an allocation of Rs 74, 850 crore that covered electric vehicles and also seeks to give a fillip to domestic manufacturing.
“The budget 2024 should continue the existing concessional rate of import duties on lithium-ion cells, to reduce the capex cost of purchasing an EV. Aligning with the government's Rs 18,000 crore production-linked incentive scheme for advanced chemistry cells, targeting a 50GWh capacity,” said Nimish Trivedi, CEO & Co-Founder, Evera.
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