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Finance Minister Nirmala Sitharaman presented the Union Budget 2023 in Parliament on February 1. During her speech, the Minister made some key announcements pertaining to the automotive industry. Among them, the major attractions were the promotion of biogas and hydrogen production, as well as tax exemptions on capital good imports related to electric vehicle (EV) batteries.
With the Budget promising a healthy push to green mobility, industry experts were quick to react to the announcements. Here’s what some of them have to say:
Banwari Lal Sharma, CEO, Consumer Business, CarTrade Tech Ltd.
The Union Budget 2023-2024 announced by Finance Minister Nirmala Sitharaman is progressive, prudent and growth-led, with an eye to provide impetus on the savings of the public. It is a ‘green budget’ for the automotive and mobility sectors. The sustainability measures taken through announcements on green hydrogen and other energy sectors will help in furthering the government’s target of carbon neutrality by 2070. The increased Capex outlay on energy transition is likely to spur investments and skill development in a green economy.
The viability gap funding for battery energy storage systems is also likely to create critical infrastructure, while custom duty reduction on capital goods for Lithium batteries manufacturing will facilitate faster adoption of EVs.
Increase in spending on infrastructure, setting up of 50 new airports and heliports, creation of 100 transport infrastructure projects are welcome moves, in addition to the central support for replacing old vehicles. All of these should drive consumption and overall demand of vehicles.
Nitin Kapoor, Managing Director, Saera Electric Auto Private Limited
We welcome the announcement made on Budget 2023-24 especially for the EV sector. One of the most significant announcements was the customs duty removal on capital goods imported for the manufacturing of lithium-ion batteries, which would eventually help reduce the cost of electric vehicles in the country. Indirect tax proposals by the government would boost green mobility and the electric vehicle sector in the country.
In addition, support for viability gap funding for battery storage solutions with a capacity of 4,000 MWh and a reduction in customs duty on lithium-ion batteries for one more year will bring us close to a net-zero carbon emission goal by 2070. But the most significant step in this realm is the allocation of Rs 35,000 crore as priority capital investment towards energy transition and achieving net-zero carbon emission.
This massive investment will emerge as fuel to India’s sustainable development goals and from providing acceleration to the EV industry. Furthermore, a scheme announced to scrap old vehicles and replace them with better ones, most positively with EVs, is a welcomed decision. The intention to encourage a zero-carbon strategy in the auto sector for the long term came out loud and clear in the budget. It will help OEMs to push for greener mobility solutions in the country and could facilitate the auto industry’s transition to cleaner mobility.
Manav Kapur, Executive Director, Steelbird International
Finance Minister Nirmala Sitharaman has tried to stimulate the auto sector of India with some smart moves in the Union Budget 2023-24. First of all, this budget paves a smooth path for the EV transition by extending the customs duty exemption to import of capital goods and machinery required for manufacture of lithium-ion cells for batteries used in electric vehicles. Whereas measures announced for skilling and research in AI, Robotics, 5G, Mechatronics and 3D printing will trigger quality production across the sectors, and the auto components industry will also benefit from incorporating these cutting-edge technologies in various operations.
On the other hand, the rebate limit on personal income tax has been increased from ₹5 lakh per annum to ₹7 lakh per annum; this initiative will directly affect the demand side with the better purchasing power of potential customers. Moreover, the announcement of replacing old government vehicles will further enhance demand for new vehicles. So, overall it is a smart budget where due attention is given to all the major sectors.
Mr. Varun Goenka, CEO & Co- Founder, Chargeup
The emphasis on green growth and net-zero emissions is the need of the hour as outlined in the Union Budget. The outlay of 35,000 crore for priority capital investments towards energy transition and net-zero goals will boost energy security in India. Further, the decision to support Battery Energy Storage Systems with a capacity of 4,000 MWH with viability gap funding will give a huge impetus to the clean energy sector.
One of the most impactful decisions this time is the extension of customs duty exemption for import of capital goods and machinery required to produce lithium-ion batteries for
EVs in India. This move will reduce the initial capital investment needs for the battery manufacturers and is also likely to make the batteries become cheaper as there will be a larger manufacturing base for them. Concession on duty on lithium ion cells import for EV batteries has also been extended for another year, which would lead to greater EV adoption in 2023. Similarly, basic customs duty exemption on raw materials required for manufacturing of nickel cathode used in the batteries has also been continued.
Improving the ease of doing business by reducing 39,000 compliances, and the decision to provide greater funding to state governments to replace old polluting vehicles are also welcome steps. It is expected that these old vehicles will be replaced with EVs and that would improve their adoption in the country. The establishment of 100 National Skill Development Centers will ensure that a larger number of youth across India are trained on advanced technologies and made ready to work in the climate-tech sector. All these are great initiatives, and if this momentum is further supported by the unveiling of the final draft for the Battery Swapping Policy, we will be able to witness accelerated growth of clean mobility in India.
Tushar Choudhary, Founder & CEO, Motovolt Mobility
The Union Budget for 2023-2024 has a strong focus on green growth and sustainability. The “Green Growth” priority sector is a step towards India’s resolve to achieve Net Zero by 2070. The government has granted infrastructure status to the EV sector, paving the way for easier access to credit for companies making EV components. This will reduce production costs and help expand India’s manufacturing capabilities in this sector.
The scheme announced to scrap old vehicles and replace the old polluting vehicles will encourage more people to switch over from petrol/diesel cars to electric ones. The Indian Government is committed towards introducing green mobility solutions such as e-rickshaws, e-bicycles and other clean energy transport systems in cities across the country with an emphasis on green growth with focus on green fuel. We are delighted to see such initiatives included in the Union Budget 2023.
Ankit Kedia, Founder & Lead Investor, Capital A
We welcome the Union Budget 2023-2024’s strong emphasis on green growth and sustainability. This budget will be used to encourage investments in renewable energy sources, reduce carbon emissions, and increase energy efficiency. One of the key aspects of this is the launch of a Rs 2,200 crore Atmanirbhar clean plan program. This is a clear indication of the government’s commitment to reducing India’s estimated total carbon emissions by 1 billion tonnes by the end of the decade.
The government’s aspirations to achieve net-zero carbon emissions by 2070 and reduce the country’s carbon intensity by 45% by 2030 are also significant steps in this direction. The government plans to develop an integrated sustainable development system that includes measures such as electric vehicles, waste management systems, water conservation projects, and solar power plants. Furthermore, the budget also promises increased funding for research and development of clean technology solutions including green hydrogen production facilities.
The government’s decision to exempt excise duty on GST-paid compressed biogas containment will give a boost to the green mobility sector. Also, custom duty exemption on the import of lithium-ion batteries will continue to focus on the transition to electric mobility. Overall this Budget will help India achieve its commitment to a low-carbon economy while achieving economic growth at the same time. It is expected that these initiatives will help create employment opportunities as well as attract foreign investment into India’s economy.
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