Impact of Union Budget on EV segment


The Union Budget 2020, presented on 1st February 2020, proposed a hike in EV import duty to promote domestic manufacturing.

Finance minister Nirmala Sitharaman proposed to increase basic customs duty on completely built units (CBUs) of electric vehicles to 40% from the existing 25%, while the same on the import of SKD form of electric passenger vehicles has been doubled to 30%.

These measures will inevitably raise the existing prices in the EV market. The motivation behind such a drastic step was provided as a way of discouraging imports and boosting local manufacturing. Although Promising, it does not seem to be a viable option.

Important components such as lithium-ion cells (of which China secures a big chunk), electric motors and other electronic parts are mostly imported by manufacturers.

Even though the higher import duty on complete vehicles will boost local manufacturers, the EV prices will undoubtedly increase. The fact that the Union Budget failed to provide any subsidies to the Existing EV manufacturers or considered any incentives to the EV segment as a whole, further solidifies the skepticism that the set deadline by NITI Ayog for 100% electrification by 2023 – 2025 will remain a distant dream.

The Govt. should have considered some breakthrough incentives such as Tax Benefits, Subsidies to the major component manufacturer & single window platform for EV Infrastructure. Successful implementation of the GETS (Green Energy Transportation System) & MMTS (Micro Managed Transportation System) would have benefitted greatly. The Govt should have considered complete Inhouse EV manufacturing Infrastructure, CSN (Charging Station Network) infrastructure & ITP Infrastructure.

If the EV platform is created with good vision it can create a job opportunity for millions of Nextgen engineers and India can become self-sufficient in energy resources.

Source: Livemint.