The major drawback for the EV industry is the expensive lithium-ion batteries. But, the Budget 2023 had some good news in its pocket for EVs. Let’s find out what it is.
Due to rising fuel prices and environmental awareness, the demand for electric vehicles has increased rapidly in India. The central government is also emphasising the use of electric vehicles. In Budget 2023, the Finance Minister has tried to provide relief and expansion to the EV industry through several provisions.
Let’s see what the provisions are.
To make the cost of electric vehicles cheaper, in Budget 2023, customs duty has been removed on parts of batteries used in EVs. India is also one of those countries largely dependent on fossil fuels for its energy needs. Because of this, the government is constantly working towards adopting green energy. Promoting the use of electric vehicles is also a part of the theme.
If we look at some stats, top companies came up with electric two-wheelers, bikes and cars, which made record sales in 2022. According to Dainik Jagran, in 2022, about 10 lakh electric vehicles were sold.
However, India still has a long way to go, as its global peers are ahead in the game. But, there are two major constraints that India has been facing.
- Cost of electric vehicles
- Charging problem
Reason Why Electric Vehicles are Expensive
Lithium-ion batteries used in EVs are expensive. With growing global EV sales and demand, lithium prices are unlikely to ease. The cost of electric vehicles will decrease only when imports are made cheaper or if the battery is produced locally. In Budget 2023, it was expected from the government that some steps would be taken to help the EV industry.
What Was The Outcome of the Budget Towards EVs?
To date, we have been importing lithium-ion batteries which are expensive, and custom duty makes them even more expensive. So, in the Union Budget 2023, the Finance Minister announced that lithium-ion batteries would no longer attract custom duty. The finance minister also said that the government would continue to give exemptions on lithium-ion battery cells for another year.
Now, let’s look at the charging issue.
The availability of charging infrastructure has been the biggest hurdle in accelerating the adoption of electric vehicles in India. However, the government has involved both private and public agencies in installing EV charging stations. Many private companies have also come forward to install EV charging stations. At present, there are more than 5,000 public EV charging stations across the country. And the number is said to grow.
A Disappointment As Subsidy Deadline Was Not Extended
People expecting an extension of the subsidy deadline under the FAME 2 scheme in Budget 2023 were disappointed. No announcement was made regarding the subsidies available for purchasing electric vehicles. The deadline is still March 2024 for Fame 2 scheme.
What’s in it For Investors?
The country still has a long way to go in electric vehicles.
India is moving fast to achieve the goal of reaching zero emissions by the year 2070. Important decisions regarding green energy have also been taken in the budget. A provision of Rs 35,000 crore has been made in the budget for green energy. Efforts have been put to solve all the challenges for electric vehicles. The EV industry will get its benefit in the coming times.
That’s it for today.
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