The recently announced electric vehicle (EV) incentives by India along with high fuel prices will be supporting factors for stronger adoption of EVs over 2020-2023, leading to an average annual growth rate of 26%, Fitch Solutions said on Tuesday.
However, it said the economic impact of Covid-19 pandemic and limited domestically produced EVs will prove a challenging barrier to overcome.
“We believe the focus on EV promotion in Union Budget will improve longer-term outlook for EV sales but will continue to fall way short of the country’s goal of electrifying all new vehicles sold by 2032,” said Fitch.
The key autos related elements include an additional excise duty of Re 1 per litre of diesel and petrol, lowering of Goods and Service Tax on EVs to 5% from 12% previously and other income tax incentives given to individuals who purchase EVs.
In the overall Asia region, EV market will continue to grow at a fast pace as more countries look to support EV uptake, reduce emissions and attract EV related manufacturing investment.
Fitch forecast that EV sales in Asia will expand by 78.1% in 2021, up from estimated growth of just 4.8% in 2020.