EV Sector Holds a Big Expectation from the Interim Budget

Electric Vehicles (EVs) are gaining popularity rapidly in the Indian market. Considering the growing awareness of climate change and a few other aspects, there cannot be a second thought – that EVs will further penetrate the market.  However, a bit change in the government’s policy can smoothen and accelerate the process of EV adoption.

Last year (2023) around 1.5 million units of EVs were sold in India. This was a spectacular year-on-year 46% growth. On April 1, 2019, the Government of India (GoI) started the Faster Adoption and Manufacturing of Electric Vehicles – II (FAME – II) subsidy scheme for two, three, and four-wheelers, which is going to be over on March 31, 2024 – after the planned completion of five financial years.

India is still at a nascent stage of adoption of EVs. Under such a backdrop, if GoI withdraws the benefits of FAME – II that may not only decelerate the rate of adoption of the EVs, but also create a big uncertainty in the sector overall. Yet another pain point of the sector is Goods and Services tax (GST).

Thus, the entire EV sector is seeking extension of the FAME – II subsidy. However, the government is still not in support of that – owing to a few major reasons including: circumvention of price caps by invoicing software and chargers separately from the EVs; violation of the localization requirement, which mandated that at least 50% of EV parts be manufactured in India.

FAME – III scheme is yet to be declared. So, on the eve of the interim budget 2024-25, the entire EV sector is expecting a good support from the GoI. Let us see how the finance minister tackles the situation!

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