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The Indian electric vehicle (EV) industry is eagerly awaiting the Union Budget 2025, hoping for significant policy interventions to accelerate its growth and achieve the government's ambitious target of 30% EV penetration by 2030. Numerous industry leaders have voiced their expectations, highlighting key areas requiring immediate attention. A recurring theme is the simplification of the Goods and Services Tax (GST) structure. Currently, the complex and, in some cases, inverted GST structure on raw materials and components increases costs and hinders the industry's competitiveness. A uniform 5% GST across all EVs, components, and charging infrastructure is widely advocated for, as it would significantly reduce costs and encourage broader adoption. This simplification would not only benefit manufacturers but also consumers, making EVs more affordable and accessible to a wider range of buyers.
Beyond GST simplification, the industry emphasizes the critical need for increased incentives to boost domestic manufacturing and technological advancements. Performance-linked incentives (PLIs) for battery innovation and indigenous component manufacturing are considered crucial. These incentives would not only strengthen India's 'Make-in-India' initiative but also reduce the country's reliance on imports of critical battery components and technologies. The development of high-quality, long-lasting batteries is a key concern, and continued government support for advanced battery technologies is essential for achieving self-reliance and reducing import dependence. This includes supporting not just the production of batteries but also their sustainable recycling, which is vital for creating a circular economy and minimizing environmental impact.
The lack of adequate charging infrastructure remains a significant barrier to widespread EV adoption. Industry leaders call for substantial investment in expanding charging infrastructure, particularly in underserved areas. This necessitates viability gap funding, grants, and rebates for homeowners to incentivize the installation of charging stations. Furthermore, increased subsidies and tax incentives, such as accelerated depreciation and electricity tariff exemptions, would further reduce the upfront costs associated with setting up charging infrastructure. Modernizing the electricity grid, supporting battery-swapping networks, and developing a seamless, interoperable EV charging system are also vital for meeting the growing demand for EVs.
Addressing the high upfront cost of EVs remains a significant challenge. Streamlined tax policies, including reduced interest rates on EV loans and targeted subsidies, could bridge this affordability gap, making EVs more accessible to the average consumer. Initiatives promoting the retrofitting of legacy vehicles with hybrid or electric kits offer a cost-effective way to reduce emissions while utilizing existing assets. This approach could significantly accelerate the adoption of cleaner mobility solutions. The integration of extended producer responsibility (EPR) mechanisms with value chain enhancements is essential for driving the creation of a circular economy within the EV sector. This will ensure the responsible management of end-of-life batteries and other components, further supporting sustainability.
The potential for technological advancement in the logistics sector is also highlighted. Strategic investments in artificial intelligence (AI), the Internet of Things (IoT), robotics, and 5G can revolutionize the logistics ecosystem, making it more efficient and sustainable. Establishing a National Logistics Technology Council to facilitate coordination between the government, industry, and academia would foster innovation and drive the adoption of cleaner, more efficient logistics solutions. Incentivizing green logistics through electric and hydrogen-powered vehicles, combined with AI-based route optimization, would significantly reduce emissions and transit costs. The government’s commitment to address delays in PLI disbursements and easing value addition norms would significantly boost the participation of domestic players in component manufacturing, reducing reliance on imports.
In summary, the Indian EV industry’s expectations for Budget 2025 center on three key pillars: simplifying tax structures to reduce costs and boost affordability; incentivizing domestic manufacturing and technological innovation in battery technology and recycling; and investing significantly in the expansion and improvement of charging infrastructure. Achieving these goals will be crucial for India to achieve its ambitious EV adoption targets and establish itself as a global leader in the EV sector. The success of these policies will determine whether India can fully capitalize on the growing global demand for sustainable transportation solutions and secure its position in the future of mobility.
Source: 'Simple tax and more push': What the EV industry expects from Finance Minister Nirmala Sitharaman