Budget 2020- Bringing Change in EV Industry

Union budget 2020 would witness some policies and amendments that will act as a key driving
factor in promoting the Electric vehicle industry. Initiatives to launch Phase 2 of FAME (Faster
Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India) is among the top in this
list. Phase I of FAME was launched in the year 2015 with total funding of INR 895 Cr and ended in
the year 2019. However, according to independent study, it was estimated that even though
customer awareness and likeliness of owning an EV have increased, the overall expected results
in areas of reducing CO2 emissions and fuel-saving were below the set standards. Due to the
limited success of FAME I manufacturers also took a back seat in showing enthusiasm towards
electrifying the Indian roads.

However, Phase 2 with a larger pool of resources is all set to work on these shortcomings and
race through the track. The project would be having total funding of INR 10K Cr and will be
stretched over a shorter period of three years. Through the scheme, support would be extended to
10 lakh e-2W, 5 Lakh e-3W, 55000 4Ws and 7000 Buses. Almost all commercial variants of
electric vehicles such as electric buses, hybrids, and electric four wheels, three-wheelers,
rickshaws and two-wheelers would be covered under the scheme. Incentives provided to a
different category of vehicles are:

Electric two-wheelers: Incentives for 10 lakh registered electric two-wheelers of INR 20000
Electric four Wheelers: Incentive of INR 13,000 each to a 20,000 the strong fleet having an ex-
factory price of up to INR 15 Lakh
E- Buses: Support to a total of 7090 buses with an incentive scheme up to INR 50 Lakh having
an ex-factory price of up to INR 2 Cr.
E- Rickshaws: Incentives to 5 Lakh e-rickshaws of up to INR 50,000 each

Amidst all these happenings there are some basic concerns that are still not properly addressed,
one being the current GST plan. Even though the government has cut down the GST rates to 5%
slab from 12% in the previous Union budget, the GST rates for raw materials and sourcing
components are still kept at a higher slab. Battery which makes up around 40% of the total
vehicle cost attracts 18% GST rates which are a huge drain for manufacturers from curbing the
overall cost. As an added burden, due to the lack of proper raw materials, most of the
manufacturer imports their needed products which create further tax problems. Hopefully, the
2020 budget would address all these issues and pave the way for a faster conversion of electric-
powered future.