As the Union Budget 2025 approaches, India’s two-wheeler electric vehicle industry is urging the government to accelerate support for critical sectors including charging infrastructure, Production Linked Incentive (PLI) schemes, and investments in research and development.
Industry representatives emphasise that the availability of charging stations remains a major roadblock to EV adoption, especially in tier-2 and tier-3 cities. They propose a dedicated allocation for building fast and efficient charging networks across the country.
“A robust charging infrastructure is crucial for boosting consumer confidence and ensuring the seamless adoption of EVs,” said Dinkar Agrawal, Founder and CTO of Oben Electric
During the interim Union Budget 2024, the finance minister had said that the government will invest and push for charging infra across India.
"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.
Performance-linked incentives for battery innovation and indigenous component manufacturing can further strengthen India’s Make-in-India push, positioning the country as a global leader in EV technology, Agarwal added.
The government’s existing PLI scheme for the EV sector has shown promise. However, industry players call for its expansion to include incentives for developing advanced battery technologies and localised manufacturing of critical EV components.
“The extension of the PLI scheme to cover cutting-edge technologies will help reduce costs and make Indian EVs competitive globally,” said a Bengaluru-based EV maker requesting anonymity.
As of August 2024, among the EV two-wheeler makers in India Ola Electric in the only manufacturer to receive PLI benefits.
Ola Electric's S1 X 3 kWh and S1 X 4 kWh scooters have received certification for compliance with the Production Linked Incentive (PLI) Scheme for the automobile and auto components sector.
Launched in 2021 with a budgetary allocation of Rs 25,938 crore, the PLI scheme aims to enhance domestic production of Advanced Automotive Technology (AAT) products and drive investments across the automotive manufacturing value chain.
“PLI will help the industry, so far only one player has received. This scheme will incentivize production and increase workforce and employment. Maybe new metrics can be brought up for PLI eligibility,” said Simple Energy’s Founder and CEO Suhas Rajkumar.
Read More: Ola Electric gets a boost as latest scooters get PLI certification
While several players Moneycontrol spoke to believe the PLI scheme will benefit the industry, many noted that the reduction in the FAME subsidy is something the sector is gradually adjusting to.
However, smaller EV players expect the government to extend the PM e-drive scheme.
The Union Cabinet, on September 11, approved the PM E-Drive Scheme with an outlay of Rs 10,900 crore for two years with an aim to boost adoption of electric vehicles (EVs) in India. The new scheme offers subsidies worth Rs 3,679 crore to incentivise adoption of battery-driven two and three-wheelers, ambulances, trucks and other emerging electric vehicles (EVs).
Under the PM Electric Drive Revolution In Innovative Vehicle Enhancement (PM E-DRIVE) Scheme, 100 percent support will be given for charging infrastructure at 88,500 sites, Information and Broadcasting Minister Ashwini Vaishnaw said in a media briefing. This investment is over and above the PLI schemes for auto and auto component sectors, the minister said.
The PM E-Drive Scheme replaces the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicle (FAME) Scheme, which was launched in April 2015 and ran for nine years in two different editions. During the second edition of this scheme, which was valid until March 31, 2024, the government subsidised 13,21,800 EVs with a total outlay of Rs 11,500 crore.
The FAMEII scheme was later replaced by the Rs 500-crore Electric Mobility Promotion Scheme 2024, which was valid for four months and got extended till September 31, 2024.
Industry seek GST Sops
The Electric Vehicle (EV) industry is calling on the government to lower the GST on EV batteries from the current 18% to 5%, in line with the GST rate for electric vehicles in the upcoming Budget.
EV players believe that reduction in GST will being down the overall cost of EVs.
“Aligning the GST at 5% for both EVs and batteries could reduce overall EV costs by more than 10%,” an EV player told.
Industry players are also anticipating consumer-friendly incentives.
“We expect the government to introduce measures that benefit consumers. Tax breaks and retail financing options would significantly boost adoption,” said Dr. Nishanth Dongari, founder of Pure EV.
To maintain the sector's momentum, EV makers also advocate for increased public and private investment in R&D. They highlight the need to innovate in battery chemistry, lightweight materials, and smart vehicle systems to cater to domestic and global markets.
“India has the potential to lead in EV innovation, but this requires a robust push in R&D funding,” said Simple’s Rajkumar said.
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