The Union Budget 2019-20 proposed a slew of measures to boost electric vehicles. Here's all you need to know about the initiatives announced for the automobile and infrastructure sector:
'India will be a global hub for manufacturing of electric vehicles'
The government has already moved the GST council to lower the GST rate on electric vehicles from 12% to 5%. "To make electric vehicle affordable to consumers, our government will provide additional income tax deduction of Rs 1.5 lakh on the interest paid on loans taken to purchase electric vehicles," Sitharaman said. This amounts to a benefit of around Rs 2.5 lakh over the loan period to the taxpayers who take loans to purchase an electric vehicle, the defence minister added.
Phase-II of FAME (Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India) Scheme, following approval of the Cabinet with an outlay of Rs 10,000 crore for a period of 3 years, has commenced from April 1, 2019. "Only advanced battery and registered e-vehicles will be incentivized under the scheme with greater emphasis on providing affordable and environment-friendly public transportation options for the common man," she said. "The main objective of the scheme is to encourage faster adoption of Electric vehicles by way of offering an upfront incentive on the purchase of electric vehicles and also by establishing the necessary charging infrastructure for electric vehicles," Union minister said in her speech.
Time for plug-ins
Announcing various infrastructure projects, the minister said: "I wish to propose a number of initiatives as part of kick-starting the virtuous cycle of domestic and foreign investment." Her announcement comes close on the heels of Niti Aayog proposing to migrate to fully electric vehicles for two-wheelers of engine capacity of up to 150 cc and three-wheelers by 2023 and 2025 respectively.
'Petrol and diesel get costlier'
Sitharaman said crude prices have softened from their highs and it gives her room to review excise duty and cess on petrol and diesel. "I propose to increase Special Additional Excise duty and Road and Infrastructure Cess each by one rupee a litre on petrol and diesel," Sitharaman said.
Road and infrastructure
The Central government will spend Rs 100 lakh crore on infrastructure upgradation over the next five years, said finance minister Nirmala Sitharaman. "Rs 100 lakh crore to be invested in infrastructure sector over next five years," said Sitharaman, adding that an expert committee would be set up to recommend structure and flow of funds through development finance institutions.
What EV companies said
Society of Manufacturers of Electric Vehicles director general Sohinder Gill said the announcements on EVs in the union budget brings cheers to both consumers as well as e- vehicle manufacturers. "To make India as an EV manufacturing hub, decision on incentivizing EV manufacturing by extending benefits under Section 35AD(1) is a move in the right direction. It will help in the creation of a local manufacturing base and encourage component manufacturers to invest in the sector," he added.
Additionally, bringing down custom duty on lithium-ion cells to nil would further cut down the cost of batteries and help local battery manufacturers to scale-up the business, he added. Ather Energy Co-founder and CEO Tarun Mehta said the additional income tax reduction is a major boost for end-consumers to purchase EVs. Similarly, Okinawa Autotech founder and managing director Jeetender Sharma said positive moves like a reduction of GST to 5 percent from 12 percent on EVs and tax benefits up to Rs 1.5 lakh on loan will make such vehicle affordable for consumers. Lohia auto Industries CEO Ayush Lohia said the government's push in the sector would help attract investment for manufacturers and ensure clean energy over time. "This decision will represent the next generation in sustainable mobility & make them an attractive alternative to consumers," he added.
News Source: Economic Times, Url: https://bit.ly/2FOJHSv