INDUSTRY NEWSOPINION PIECE

Budget 2021: Expectations of EV startups in India

By Livemint

New EV manufacturers in India are looking for a boost from the central government on 1 February. Ranging from concerns regarding current GST duty structure to anticipation for the Production-linked incentive (PLI) scheme and vehicle scrappage policy, here’s what young EV startups (edited excerpts) in India are looking for in Budget 2021.

Tarun Mehta, Co-Founder & CEO, Ather Energy

“For manufacturers, one of the key challenges on investments in the sector are the concerns regarding GST inverted duty structure. In order to minimise working capital blockage, the Government should look at extending end-use based benefits to the EV industry like lowering GST rates on raw materials, allowing inverted duty refunds for research and development and capital expenditure. Especially for startups like ours in their growth phase, offsetting inputs on such major expenses without being GST profitable is a big challenge.

From an operational perspective, we are closely following the Production-linked incentive (PLI) scheme and we look forward to more progressive schemes designed for OEMs”

Jeetender Sharma, Founder & Managing Director, Okinawa Autotech

“2021 can prove to be a revolutionary year for the electric vehicle (EV) industry. We have high hopes from the union budget this year and are optimistic that the government will continue to take the right steps to place India on the global EV map. With that said, we urge the finance minister to reconsider the current taxation framework applicable on raw material and the final product in case of EVs. While the GST input on raw material is 18%, the tax on outward supplies currently stands at 5%, leading to an implicit inverted duty structure for us (manufacturers). This move could help in optimizing the cash flows.”

He adds, “The central government’s recent move to extend the PLI scheme to the automobile sector including for manufacturing of Advanced Chemistry Cells (ACC) is commendable. While this will definitely give a boost to local manufacturing, better yet, the government must also look at aggravating the domestic demand by further incentivising individual and commercial consumption of EV pan India.”

Irfan Khan, Founder and CEO of eBikeGo

“The auto industry especially, EV sector expects relief from the Union Budget 2021-22 in multiple areas including direct and indirect taxation. The government should include reduction of GST rates on vehicles and measures to improve the disposable income of the salaried class. The government should consider expanding the availability of tax deduction of interest on the loan for EVs to other vehicles. The government and the GST council should make EV cheaper by temporarily reducing the GST rate and reducing the compensation cess rates. Removal of restrictions to avail the input tax credit of GST paid on automobiles for businesses would make automobiles cheaper when used for business purposes, besides fulfilling the basic intention of GST to eliminate cascading of taxes. This move can have a positive impact in these difficult times.”

Suhas Rajkumar, Founder, Simple Energy

“EV manufacturers would certainly hope for few policy changes, ease of finance, and reduction of GST slabs from the upcoming Union Budget. These costs eventually increase the cost of manufacturing and of owning the EV, which again slows down its adoption. Undoubtedly, the government has shown its support with various initiatives to boost the usage and adaption of EV like the National Electric Mobility Mission plan 2020, capital subsidies under FAME, etc to name a few, and we’re expecting them to take more supportive steps on the policy framework which will help the EV sector in long term.”

Bunisha Khajamohideen, Co-Founder, Terabite Ekarts

“The pandemic has made the startups see a lot of ups and downs in the previous year. It indeed pushed us to become self-sustainable. The government has taken a lot of measures to empower street vendors. But we also expect some more norms and relaxation like the single window clearance for the street vendors to get the compliances done and boost the street-commerce vertical.”

Rushi Shenghani, CEO & Founder, Earth Energy EV

“Hoping for a huge opportunity in the sector to get localized, we are keeping up our expectations high on this year’s Union Budget, which will certainly bring up advancement in the sector. To further support the localization of battery production which accounts for around 40% of the EV development cost, the government can reduce the GST on batteries as well as import duty slabs. It presently incorporates the GST of 18% on lithium-ion batteries and 28% on lead-acid batteries. The cost of an EV can come down significantly with the GST reduction. Also, the Govt should finalize its incentives-based scrappage policy which can help create demand in the commercial vehicles (CV) segment as well.”

He adds, “We request govt. to also be liberal with Infrastructure spending and make charging stations mandatory in all the official and residential areas which will contribute to increasing penetration of EV across the country.”

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