Union Budget 2019-20: Electric vehicle sales may move to the fast lane
Union Budget 2019-20: Electric vehicle sales may move to the fast lane
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The Union Budget proposes to provide an income tax deduction of ₹1.5 lakh on the interest paid on loan taken to buy electric vehicles (EV). Accordingly, the buyer of an EV will get a total benefit of ₹2.5 lakh over the purchase period.
The EV industry believes that this would bring the cost of ownership of EV significantly down and therefore expedite EV adoption in the country.
The government has already moved the GST Council to lower GST on EV from 12% to 5%, said Finance Minister Nirmala Sitharaman in her budget presentation. The EV is a comparatively new space for India and this is the first time it has been proposed to become a direct tax beneficiary.
The Hindu spoke to several EV ecosystem players to gather their reactions.
Bhavish Aggarwal, co-founder and CEO of Ola, said, “The government’s focus on electric mobility and EVs in the Budget 2019 is inspiring. Lower GST rate, interest subvention for EV loans and the commitment of ₹10,000 cr towards FAME 2 are encouraging.”
Echoing similar sentiments, Shailesh Chandra, president, Electric Mobility Business and Corporate Strategy, Tata Motors Ltd said, “The incentives…reinforce a strong commitment by the government to steer electrification on a faster trajectory. The proposal to lower the GST rate to 5% is a welcome step”
As per Santosh Kamath, partner and lead, Alternate Energies, KPMG in India, “The proposal, depending on the tax bracket, would mean an annual incentive of ₹20,000 to ₹50,000 for the entire tenure of the loan…subsidies under the FAME will give a huge boost to demand.”
Also, bringing down custom duty on lithium-ion cells to nil would further cut down the cost of batteries and help local battery manufacturers to scale up the business.
Vineet J. Mehra, managing director of DOT, a firm that offers green mobility services through a small fleet of EV, said that specific financial option for purchase of EV by aggregators and e-logistics players found no mention in the budget.
Sohinder Gill, director-general, Society of Manufacturers of Electric Vehicles, is of the opinion that that the decision on incentivising EV manufacturing by extending benefits under Section 35AD (1) would help in creation of a local manufacturing base and encourage component manufacturers to invest in the sector.
Sunil Gupta, MD and CEO of car rental firm Avis India, said, “The provisions made for EV promotion will help sustain the EV momentum in the country. What the country requires is a dedicated push to create a stronger EV support infrastructure on a pan-India basis with a mandate to drastically reduce carbon emission and air pollution levels.”
As per SMEV statistics, India’s EV sales in FY19 grew to 7.59 lakh units from 56,000 units in FY18. A majority of these were electric three-wheelers, which saw sales of 6.3 lakh units.
