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EV makers expect extension of FAME II, duty cuts in Budget 2023-24
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IANS | 20 Jan, 2023
Extension of the Faster Adoption and Manufacturing of (Hybrid &)
Electric Vehicles in India - II (FAME II) subsidy scheme,
rationalisation of GST are some of the budget wishes of the electric
vehicle makers, said CARE Ratings as per its survey.
According
to the survey, the electric vehicle makers want the FAME II subsidy
scheme to be extended beyond March 2024 and also bring the commercial
vehicles under it.
After the momentum witnessed in electric
vehicle adoption in 2022, it will be critical for the government to
continue to support the adoption so that it will go over the tipping
point and the momentum doesn't die out, said Anirudh Ravi Narayanan,
CEO, Bharat New Energy Company that rolls out electric two wheelers.
"First,
a continuation of the FAME II subsidy or introduction of a FAME III
subsidy will greatly benefit the adoption. If this subsidy were to be
abruptly discontinued in 2024, it will create a demand shock in the
market," Narayanan added.
He also said there is a perception that
FAME II subsidy has become risky to pass-on to customers since
subsidies are being withheld, updates are being announced with a short
time fuse, and there are potentially interest groups affecting the
industry.
Unless the government addresses these points, FAME may
end-up getting viewed by vehicle makers as a "bonus" if it comes, and so
there may not be an end-customer benefit, Narayanan said.
As per
the CARE Ratings survey, the manufacturers want tax rates to be lowest
for electric vehicles and also include small/medium-size/start-up
players contributing to the electric vehicle ecosystem under the
Production Linked Incentive (PLI) scheme.
The other expectations
voiced by the industry officials to the CARE Ratings survey are:
Subsidised financing rates on loans availed by manufacturers of pure
electric vehicles for setting up manufacturing facilities and for auto
loans availed by buyers - whether by commercial vehicle fleet owners or
buyers of individual cars or two wheelers; increase in the all-industry
rate of duty drawback and rate of remission of duties and taxes on
exported products to enhance the exports.
Narayanan said the soon
to be announced battery-swapping policy could be a strong boost to the
industry but it should not stipulate size/interface related standards
except only a minimum set of safety and performance related standards.
"Setting
any size/interface standards may benefit one group much more so than
others and create a monopoly within the industry and may not be able to
service a broad range of vehicles in the market," Narayanan said.
According to him, India can soon become globally competitive and the electric vehicle export market could develop soon.
"To
support this, it is recommended that duties for items that unavoidably
need to be imported (such as cells, rare-earth magnets, semiconductors)
be dropped to zero until local capacity develops. Without this, China
will have a cost advantage over India in global markets. Also, extension
of PLI benefits for SKD/CKD assemblies - and not only full vehicles -
would also be very beneficial," Narayanan said.
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