Govt. Plans To Invest INR 100 Billion ($1.4 Billion) To Incentivize Electric Vehicle Manufacturing In India
Owing to the fact that India includes some of the world’s most polluted cities, the government is focused toward ensuring reduced greenhouse gas emissions from the automotive sector. Thus, the government has planned to invest INR 100 billion ($1.4 billion) toward incentivizing electric vehicle manufacturing in the country through its Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme. To further, promote the adoption of EVs in Indian market, the government during the 36th GST council meeting recommended a reduction in GST from 12% to 5% for electric vehicles and the GST for EV charger / charging stations has been reduced from 18% to 5%.
Additionally, the government is planning to introduce several tax benefits of up to INR 1.5 Lakhs ($2,189) on interest paid on loans, with a total exemption benefit of INR 2.5 Lakhs ($3,649) to buy electric vehicles. In order to reduce the raw material cost of lithium-ion battery in India, custom duty exemptions have also been announced. Moreover, the exemption has also been announced for several electric vehicle components including on-board chargers, e-compressors, charging guns, and e-drive assemblies, among others.
According Ajeya Saxena, Lead Analyst at BIS Research, “Government initiatives such as Make in India will be key to enable electric vehicle adoption in the country. Local manufacturing of batteries and other EV components will be integral to ensure the smooth development of EV market in India without excessively depending on other countries for imports. Moreover, a high rate of EV adoption in the country will require a large number of local mechanics to be reskilled in order to deal with the electric vehicle technology.”
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The government has decreased the goods and services (GST) tax slab for electric vehicles to 5% from 12% earlier, to ensure affordability of electric vehicles for the public. Moreover, the incentivization of the sale of electric vehicles is expected to regulate the increasing oil imports in the country. As per the data released by the Oil Ministry’s Petroleum Planning and Analysis Cell (PPAC), India’s dependency on oil imports has reached 83.7% in 2018, and currently, India is the third largest oil importer in the world.
At present, the EVs in India that are majorly two- and three-wheelers do not require fast charging options. However, with ambitious targets set for the EV market development in the country, the government is actively planning to improve the infrastructure for fast charging technologies. These technologies will be key to the market success of passenger electric vehicles such as the newly launched Hyundai Kona. Some of the leading companies which are installing electric vehicle charging stations in India are Ather Grid, ABB, Delta Electronics, ECOYAN, Exicom, and EESL.