Budget 2022: From EV infra to PLI scheme, two-wheeler makers list expectations

As the Centre prepares to present the Union Budget 2022-23, auto industry has started to share their expectations from Finance Minister Nirmala Sitharaman. The upcoming Budget is expected to propose several measures for the auto industry with key focus on the emerging electric vehicle space in India.

The government's push for EV adoption with help of FAME II subsidies has resulted in massive growth in the segment over the past year. According to Society of Manufacturers of Electric Vehicles (SMEV), India bought more electric vehicles in 2021 than what was purchased collectively in the past 15 years. Sales of electric two-wheelers saw a two-fold rise with nearly 2.34 lakh units compared to just over one lakh units in 2020.

Indian two-wheeler manufacturers have already stated how the Centre's FAME II scheme has helped in growth of electric two-wheelers. Almost all of them want the Centre to continue with the scheme in future to maintain momentum in the next fiscal as well.

Tarun Mehta, Co-founder and CEO at Bengaluru-based Ather Energy, had earlier said, “The demand for electric vehicles continues to surge ahead as consumers reap benefits offered by the FAME II subsidy and tax rebates. To keep up the consumer demand and to drive faster adoption of EVs, we are hopeful that the FAME II subsidy would continue well beyond 2023."

Indian two-wheeler manufacturers expect the Centre to also focus on including more players under the recently announced PLI scheme. Naveen Munjal, managing director at Hero Electric, was quoted by Mint saying, “We’ve got strong policies already in place at the central and state levels that are good to create demand and to encourage manufacturing. But when it comes to the PLI scheme, our ask would be to make it more inclusive and wider to enable more EV makers to benefit from it. Currently, it is a highly selective scheme."

Ather Energy's Tarun Mehta echoed Munjal's opinion on PLI scheme. He said, “There is a need to be inclusive in this approach as startups would help open up more opportunities for the industry to help drive growth and innovation in the sector. Similarly, EV manufacturers have highlighted concerns around GST inverted structure and have requested reducing taxes on input costs."

Another key factor to grow EV sales in India is to boost the charging infrastructure. While several manufacturers have their own set of charging network, they feel that the Centre should offer incentives for others to join in.

“There is a tremendous requirement to mandatorily ensure EV charging infrastructure to be set up in all existing and upcoming housing projects and commercial establishments. Also, incentivising setting up EV charging stations in existing residential areas, housing complexes and commercial establishments will go a long way in setting up the infrastructure," said Mehta.

Suhas Rajkumar, CEO and Founder at Simple Energy, said, “Since the consumers are concerned about a general lack of charging infrastructure, the government needs to propel the sector by providing for the same. To facilitate the mass adoption of electric vehicles in India, we need a seamless EV infrastructure that is much more capable and connected, sustainable and has a more intelligent mobility landscape."

Vivekanada Hallekere, CEO and Co-founder at Bounce, said, “GST rates on charging infrastructure needs to be aligned, as it currently stands at 18%."

“In the last decade, the government of India (GOI) has announced policies and regulations like Faster Adoption and Manufacturing of Hybrid and Electric vehicle (FAME), which was supposed to end in March 2022 but has been extended till 2024, to encourage the EV industry. However, the sector still requires a uniform policy to promote EVs across the nation, making it easier for businesses focusing on green transportation to expand their footprint." says Ketan Mehta, CEO and Founder – HOP Electric Mobility

The two-wheeler manufacturer also seeks the Centre to allow more disposable income and other measures in order to increase sale of EVs. “From a two-wheeler perspective, over two-thirds of our customers have average monthly incomes of less than ₹50,000 and this segment has got considerably weakened in the last two years. Measures to increase disposable income and bolster confidence in this segment of the population will manifest in demand improvement for us," Rakesh Sharma, Executive Director at Bajaj Auto, was quoted by Mint.

Hallekere said, “We urge the government to extend the benefit to retrofit ICE bikes into EVs. The capital outlay under this option is modest comparatively and a complete exemption on the conversion cost will provide the much-needed impetus to EV adoption."

While there has been a lot of debate whether the Centre needs to reduce import duties on electric vehicles, there will be a keen eye on what the Budget 2022 will hold. US-based EV maker Tesla has been trying to negotiate to bring down the duties before it launches any cars in India.