Electric cars in India to become cheaper
Finance Minister Nirmala Sitharaman presented the Union Budget 2019 in the Parliament today. In her speech, the Finance Minister mentioned that the Indian government continued to focus on promoting electric mobility in the country. She said, “FAME II scheme aims to encourage faster adoption of electric vehicles by right incentives and charging infra.”
So, exactly how is the government hoping to achieve this? The biggest endeavour in this regard is the reduction of the GST levied on electric vehicles. The government has lowered the GST rate for electric vehicles from the current twelve per cent to five per cent. This will help cut down the upfront cost of purchasing an electric vehicle in India, thus making it a viable alternative to vehicles propelled by internal combustion engines (ICE).
Besides this, the government will now also offer a discount of ₹1.5 lakh on the interest paid for electric vehicle loans. The Finance Minister noted that people will receive an overall benefit worth ₹2.5 lakh on buying EVs. This benefit includes the aforementioned discount on the loan along with other tax benefits offered over the loan tenure.
In order to reduce the lifetime ownership cost of electric vehicles, the 2019 budget also offers relief to lithium-ion electric battery manufacturers. This has been done to reduce the cost of EV batteries. And given that one of the most significant maintenance cost associated with electric vehicles is the replacement of depleted batteries, reduced battery costs are likely to encourage people to embrace electric vehicles.
The Economic Survey of India 2019, which was tabled yesterday in the Parliament, noted that there is a need to bring down the cost of manufacturing electric vehicles here. The reduced cost of manufacturing will not only generate employment opportunities, but also help in easing the transition from ICE-based vehicles to electric cars, electric two-wheelers, etc. Building on this, budget 2019 has will also exempt specific raw materials used in EV manufacturing from custom duties.