Union Budget 2024 evokes mixed reactions among India’s EV startup industry

Budget 2024

India’s electric vehicle (EV) startups have lauded the Government’s intent to strengthen the electric vehicle ecosystem including the charging infrastructure, even as some founders rued the reduction in customer-centric incentives like the FAME scheme as well as the lack of clarity on the FAME III subsidy.

“The Interim Union Budget for 2024-2025 places a significant emphasis on advancing a more environmentally friendly public transportation system… However, a notable absence is observed in the continuation of direct customer subsidies, a crucial component that played a significant role in driving the adoption of electric vehicles across various categories during the last 2 years,” said Sohinder Gill, Director General of the Society of Manufacturers of Electric Vehicles (SMEV), to Moneycontrol.

Founders say that the Centre’s intention to develop the ecosystem and its push to transition public transportation to EVs is a big boost for the sector.

“As we move ahead, the adoption of cleaner and green transport alternatives, rationalising the GST tax structure on EV charging and batteries, coupled with the reinforcement of existing EV policies and the introduction of new ones, will play a critical role in promoting electric mobility and achieving India’s climate goals,” said  Anmol Singh Jaggi, CEO and Co-founder, BluSmart.

Early-stage startups have also cheered the Government’s announcement on strengthening EV public transportation.

Follow Moneycontrol's Comprehensive Coverage of Interim Budget 2024

“We believe that new-age, technology-enabled electric mobility services, like shared EVs, will play an important role in offering smart, eco-friendly, and world-class experiences to domestic and international tourists,” added Amit Gupta, Co-Founder & CEO of Yulu.

“The Government focussing on strengthening the EV infrastructure will ensure faster adoption of EVs and will give an overall boost to the EV industry. EV infrastructure is the backbone,” said Neeraj Manchanda, Founder, of Zuge Electric.

While there was no mention of the extension of FAME II subsidy or introduction of FAME III during the budget speech, founders are awaiting more clarity from the government on FAME III and on battery manufacturing PLI.

“We were hoping for some clarity on FAME subsidies and also hoping for some subsidy for battery swapping. We hope that there will be some specifics shared and probably swapping infrastructure to be part of charging infrastructure,” said Vivek Hallekere, founder and CEO of EV manufacturing firm Bounce Infinity.

“The battery manufacturing industry expected the Union Budget 2024 to consider a special incentive programme for battery raw materials and chemical processing and extension of the production-linked incentive (PLI) scheme for ACC battery manufacturing, we hope that the Government will consider these in the full-fledged budget that will be presented in July,” said Chandrakanth Ramalingam, Founder and CEO, NSure Energy.

The Centre has reduced the budget allocation for the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicle (FAME) scheme by nearly 44% to Rs 2,671 crore for FY25, which could result in a slowdown in the adoption of electric vehicles in India.

Also Read: Govt reduces budget allocation to FAME subsidy by 44% to Rs 2,671 crore for FY25

In FY24, the government allocated a revised estimate of nearly Rs 4,807 crore for FAME schemes, according to the government’s budget allocation document published on February 1, 2024.

There was no mention FAME III scheme in the budget 2024 speech, however, the Finance Minister said that the government will push for EV manufacturing and the development of charging infra.

“As India moves towards its net zero emission target by 2070, the Government will work towards expanding and strengthening the EV ecosystem as well as develop the charging infrastructure," said Finance Minister Nirmala Sitharaman while delivering the Interim Union Budget 2024 speech on February 1.

Also Read: Govt reduces budget allocation to FAME subsidy by 44% to Rs 2,671 crore for FY25

EV charging infrastructure startups have cheered the government’s focus on developing the entire ecosystem.

“We are glad to be able to play a key role in steering this positive transformation by actively contributing to the manufacturing, installation, and maintenance of EV charging stations across the country. As part of the National Highway Electrification Scheme,” said Kartikey Hariyani, Founder and CEO of ChargeZone.