Budget 2023 marks the 'transition of auto industry to clean mobility': EV sector

The Union Budget 2023 has removed custom duty on capital goods/machinery for manufacture of lithium-ion cells for use in batteries of electrically operated vehicles (EVs). The move is said to help in reducing the cost of EVs in the country.

“To further provide impetus to green mobility, customs duty exemption is being extended to import of capital goods and machinery required for manufacture of lithium-ion cells for batteries used in electric vehicles,” Finance Minister Nirmala Sitharaman said in her speech.

Here is how the Electric Vehicle industry responds to the FM’s move:

Etrio, an EV-maker that works with the vision to “make big in cargo fleet electrification” shared its response. As Finance Minister Nirmala Sitharaman announced the budget today, Kalyan C Korimerla, MD and Co-Promoter, Etrio Automobiles, said, “We applaud the budget for making Green Growth one of the top seven priorities. The Pro-EV budget focuses on much-needed initiatives such as Customs Duty reduction from 21 percent to 13 percent on Lithium Batteries and an extension of the subsidies on EV batteries for one more year. These are welcome initiatives as these will help boost the demand. The policy on the replacement of old polluting vehicles should accelerate the transition towards electric vehicles which is in line with the budget’s aim to spur eco-conscious lifestyles. Overall, we are happy with the budget as it is inclusive, and progressive and will encourage investments in the EV sector.”

Saloni Roy, Partner, Deloitte India, expressed, “In order to promote the sustainability agenda of the government to enhance electric vehicle (EV) mobility, customs duty exemption has been extended to the import of capital goods and machinery required for manufacturing of lithium-ion (Li-ion) cells for batteries used in EVs. This is in line with the objective to boost domestic manufacturing, domestic value addition and green energy. This will make electric vehicles more competitive by reducing import duty costs.”

Sameer Aggarwal, CEO and Founder, Revfin gave his insights on budget reforms. He said, “The government's dedication to the ‘green growth’ approach promoting environmental sustainability, as emphasized by Finance Minister Nirmala Sitharaman in the recent Union Budget 2023, is a commendable development. The emphasis on reducing carbon footprint and generating employment through green growth initiatives displays a deep comprehension of the interdependence of the environment and the economy.”

Aggarwal added, “The 7 main priorities, referred to as "Saptrishi," will drive sustainable and environmentally friendly economic development and this, truly is in the direction of India seeking a leadership role in mitigating the global climate crisis. Budget is very positive for the rural economy as it's talking about investments and credit schemes in agriculture, fishery, cattle etc and this would increase income for rural folks and now they may have higher capacity to have L5 ( e rickshaw for commercial purposes) and better capacity to repay EMIs. Customs duty exemption is being extended to imports of capital goods and machinery required for the manufacture of lithium-ion cells for batteries used in electric vehicles to further boost green mobility.”

Commenting on green mobility, Rajeev Singh, Partner and Automotive Sector Leader, Deloitte India, presented his viewpoint. According to Singh, Despite all the uncertainty globally, todays Budget is very progressive, future looking and should drive consumption.

“From Auto Sector perspective, the increase in outlay for Capital Spending, increase in spending on Infrastructure, setting up 50 new Airports, creation of 100 Transport Infrastructure projects, central support for replacing old vehicles should all drive demand of vehicles. Focus on Agriculture & Rural India are also all steps in reviving rural economy which impact 2W and entry level cars. Overall the focus on Green India should also assist in transitioning of Auto Industry to Clean Mobility,” says Singh.