Budget 2023: EV makers in India want uniform GST and FAME-II subsidies extended

SMEV wants Union Budget 2023 to include EV parts in the 5 per cent GST bracket instead of 28 per cent to make taxation on electric vehicles in India u
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The Society of Manufacturers of Electric Vehicles (SMEV) has listed a series of expectations from the upcoming Union Budget, which includes uniform taxation of EVs and EV spare parts.
The Society of Manufacturers of Electric Vehicles (SMEV) has listed a series of expectations from the upcoming Union Budget, which includes uniform taxation of EVs and EV spare parts.

Society of Manufacturers of Electric Vehicles (SMEV) has shared its list of expectations from Union Budget 2023 which includes uniformity in GST taxation on EV parts as well as extension of subsidies for EVs under the FAME II scheme. The SMEV also wants light commercial electric vehicles, which includes the likes of electric three-wheelers to be also included under the FAME II scheme. The wish list from the SMEV comes days before the Union Budget for the FY 2023-24 is presented in the first week of February.

In its expectation from the Union Budget, the SMEV wants all EV parts to be also included in the five per cent GST bracket to make taxation uniform for EV makers. The SMEV said while 5 per cent GST is levied on electric vehicles on their ex-showroom price, the industry ends up paying 28 per cent for spare parts of EVs, except for the batteries. "The request, therefore, is for levying a uniform 5 per cent GST for all EV spare parts," it said.

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SMEV also has shared its wish to reduce basic customs duty on lithium-ion cells, a key EV battery component, to zero. SMEV said, “the manufacturing of lithium-Ion cells within the country is still in its nascency." It wants the duty to remain at its minimum until India develops enough infrastructure to manufacture them locally.

The SMEV also wants the FAME II subsidies to be extended beyond its end-date March 21, 2024. "We believe FAME's validity needs to be extended since we have yet to meet the penetration the subsidy was supposed to catalyse," SMEV said in a statement issued on Tuesday. According to the EV makers' body, the market trends suggest that the EV segment in India, especially the two-wheeler segment, could continue to grow at an exponential rate. "The subsidy can be tapered thereafter," it said.

SMEV also wants the ambit of the FAME II scheme to be extended to light commercial vehicles, medium and heavy commercial vehicles for India to make its transition to electric public transports like trucks and buses in the next three to four years. The SMEV said,"Increase the scope of FAME to include commercial vehicles on a project mode basis. Today, trucks account for over 40 per cent of India's fuel consumption and over 40 per cent of the greenhouse gas emissions across the road transport sector."

The electric vehicle segment in India grew by more than 200 per cent in 2022, clocking record year in terms of sales with nearly a million units sold. Indians bought 9.99 lakh units of electric vehicles last year, led by electric two-wheelers in the passenger EV segment.

First Published Date: 03 Jan 2023, 13:31 PM IST
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