India's two-wheeler electric vehicle sector is pleading with the government to expedite support for vital areas like as R&D investments, Production Linked Incentive (PLI) programs, and charging infrastructure as the Union Budget 2025 draws near.
The availability of charging stations is still a significant barrier to the adoption of EVs, particularly in tier-2 and tier-3 cities, according to industry representatives. They suggest allocating funds specifically for the construction of quick and effective charging networks throughout the nation.
Dinkar Agrawal, Founder and Chief Technology Officer of Oben Electric stated, "A strong charging infrastructure is essential for increasing consumer confidence and guaranteeing the smooth adoption of EVs." The finance minister had stated in the interim Union Budget 2024 that the government will make investments and promote charging infrastructure throughout India.
In her statement at the Interim Union Budget 2024 on February 1, Finance Minister Nirmala Sitharaman stated, "The Government will work towards expanding and strengthening the EV ecosystem as well as developing the charging infrastructure as India moves towards its net zero emission target by 2070."
According to Agarwal, performance-based incentives for battery research and domestic component production can bolster India's Make-in-India campaign and establish the nation as a leader in EV technology worldwide. For the EV industry, the government's current PLI program has shown promise. Industry participants, however, demand that it be expanded to provide incentives for the development of cutting-edge battery technology and the local production of essential EV components.
An EV manufacturer from Bengaluru who asked to remain anonymous stated, "The expansion of the PLI scheme to cover cutting-edge technologies will help reduce costs and make Indian EVs competitive globally." As of August 2024, Ola Electric is the only EV two-wheeler producer in India to be eligible for PLI benefits.
The Production Linked Incentive (PLI) Scheme for the automotive and auto component industries has certified Ola Electric's S1 X 3 kWh and S1 X 4 kWh scooters as compliant. The PLI initiative, which was introduced in 2021 with a budgeted allocation of Rs 25,938 crore, intends to stimulate investments throughout the automobile manufacturing value chain and increase domestic production of Advanced automobile Technology (AAT) goods.
"PLI, which has only benefited one player thus far, will benefit the industry." This plan will boost employment and the workforce while incentivizing production. Suhas Rajkumar, the founder and CEO of Simple Energy, stated that perhaps additional criteria should be introduced for PLI eligibility.
A number of industry participants also expressed their belief that the PLI plan will help the sector, but several also pointed out that the industry is progressively acclimating to the FAME subsidy reduction. Smaller EV companies, however, anticipate that the government will prolong the PM e-drive program.
In an effort to increase the use of electric vehicles (EVs) in India, the Union Cabinet approved the PM E-Drive Scheme on September 11th, allocating Rs 10,900 crore over a two-year period. To encourage the use of battery-powered two- and three-wheelers, ambulances, trucks, and other new electric vehicles (EVs), the new program provides incentives totaling Rs 3,679 crore.
At a media briefing, Information and Broadcasting Minister Ashwini Vaishnaw stated that charging infrastructure at 88,500 locations would receive 100% assistance under the PM Electric Drive Revolution In Innovative Vehicle Enhancement (PM E-DRIVE) Scheme. According to the minister, this investment goes beyond the PLI plans for the auto and auto component industries.
Launched in April 2015 and operating in two editions for nine years, the PM E-Drive Scheme takes the role of the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicle (FAME) Scheme. With a total investment of Rs 11,500 crore, the government subsidized 13,21,800 EVs during the second iteration of this program, which ran until March 31, 2024. The Rs 500-crore Electric Mobility Promotion Scheme 2024, which was initially only available for four months before being extended to September 31, 2024, eventually took the position of the FAMEII scheme.
Industry Looks for GST Sops
The government is being urged by the electric vehicle (EV) industry to reduce the GST rate on EV batteries from the current 18% to 5% in order to bring it into line with the GST rate for electric automobiles in the next budget. EV manufacturers think that a lower GST will result in a lower total cost for EVs. According to an EV participant, "setting the GST at 5% for both EVs and batteries could lower overall EV costs by more than 10%."
Furthermore, consumer-friendly incentives are also anticipated by industry participants. "We anticipate that the government will enact policies that will help consumers. Adoption would be further accelerated by tax advantages and retail financing options, according to Dr. Nishanth Dongari, Founder at Pure EV.
EV manufacturers also want more public and private investment in R&D to keep the industry moving forward. In order to serve both domestic and international markets, they emphasize the necessity of innovating in battery chemistry, lightweight materials, and smart vehicle technologies. Rajkumar of Simple stated that "India has the potential to lead in EV innovation, but this requires a robust push in R&D funding."
