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Budget 2023: Center Takes Measures To Boost EV Adoption In India

In her Union Budget 2023 presentation, Finance Minister Nirmala Sitharaman claimed that the government would provide an exemption on capital goods and machinery needed for producing lithium-ion batteries for electric vehicles EVs

Budget 2023: Center Takes Measures To Boost EV Adoption In India
POSTED ON February 04, 2023 4:07 PM

The Economic Survey 2023, tabled before the presentation of Union Budget 2023, revealed that the Indian electric vehicle (EV) market is likely to grow at 49 per cent CAGR (compound annual growth rate) between 2022-2030, crossing one crore unit sales by the end of this period. This is a huge jump up from the EV sales of 10 lakh units in 2022. 

The government has been bullish about propelling the EV sector, which it believes will go a long way in helping the administration achieve its net zero targets by 2070. Moreover, as this industry scales up, it is expected to provide five crore direct and indirect jobs in 2030. 

To ensure that the sector’s growth accelerates, the central government announced several initiatives in the Union Budget 2023. This included extending the existing subsidies on the EV batteries for one year, which will reduce the cost of manufacturing them. 

“I propose to continue the concessional duty on lithium-ion cells for batteries for another year,” Finance Minister Nirmala Sitharaman stated while presenting the Union Budget 2023 earlier this week. 

Finance Minister Nirmala Sitharaman
Finance Minister, Nirmala Sitharaman

The budget also provided an exemption on the capital goods and machinery needed for producing lithium-ion batteries for EVs. It also brought down customs duties on these batteries from 21 per cent to 13 per cent. 

These announcements were met with enthusiasm from industry players, who felt gratified that environmental sustainability was amongst the top seven priorities in the Budget.

Anmol Bohre, co-founder and managing director (MD) of Enigma, called it a pro-EV budget that focused on much-needed initiatives such as Customs Duty reduction from 21 per cent to 13 per cent on capital goods and machinery required for Lithium Batteries and an extension of the subsidies on EV batteries for one more year. “This will certainly encourage each EV manufacturer to contribute to Government initiatives to achieve mass EV adoption by 2030. This will also encourage investments in the EV sector which help new players to continue with innovation,” he emphasised.

Pranav Goel, the co-founder and CEO of logistics company Porter, too, appreciated the push for green growth in the Budget, which promoted green energy and green mobility including other sustainable initiatives. “This will help reduce the carbon intensity of the economy and will provide for large green-scale job opportunities. Policy interventions like replacing the old polluting vehicle will pave way for efficient use of energy across the sustainable logistics ecosystem,” he noted. 

Sops For A Growing Sector 

FM Sitharaman allocated Rs 2.7 lakh crore to the Ministry of Road Transport and Highways (MoRTH), up from Rs 1.99 lakh crore allotted in the previous year. Additionally, she proposed a Rs 75,000 crore investment in connectivity infrastructure projects. 

Lauding this move, Ajay Thomas, the head and vice president of Teamlease Services, said, “The establishment of 100 transportation infrastructure projects and the provision of a capital outlay of 2.40 lakh crores for railways, which is approximately nine times the outlay made in 2013-14, are both welcome moves because these initiatives will create a large number of job opportunities for both skilled and unskilled labour in the industry.”

Gautam Kumar, CEO and chief operating officer of FarEye felt that the move to invest Rs. 75000 crores with a focus on prioritising 100 transport infrastructure projects that will develop last and first-mile connectivity for ports, coal, steel, and other sectors is a welcome step. “Improving last and first-mile connectivity will have a direct impact on bringing down the logistics costs for industries and ultimately will help them become more competitive in the international market,” he reaffirmed. 

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