Union Budget 2023-24 | Reactions from the Indian EV Industry

Finance minister Ms Nirmala Sitharaman presented the union budget 2023-24 on Feb 1, 2023. The budget includes Green Growth as one of the government’s top 7 priorities. Below are some of the announcements outlined for Green Growth objectives:

• ₹35000 crore outlay for energy security, energy transition and net zero objectives.
• Annual production of 5 MMT under Green Hydrogen Mission to be targeted by 2030 to facilitate the transition of the economy to low carbon intensity and to reduce dependence on fossil fuel imports.
• Battery energy storage systems to be promoted to steer the economy on the sustainable development path.
• 20,700 crore outlay provided for renewable energy grid integration and evacuation from Ladakh.
• Green Credit Programme to be notified under the Environment (Protection) Act to incentivize and mobilize additional resources for environmentally sustainable and responsive actions.

The following statements issued by the finance minister have a direct impact on the EV ecosystem:

– Concessional duty on lithium-ion cells for batteries extended for another year.

– Customs duty exemption on the import of specified capital goods/machinery for the manufacture of lithium-ion cells for use in EV batteries has been extended to 31.03.2024.

Here are some of the early reactions from the Indian EV Industry:

Mr Samrath Kochar, Founder & CEO of Li-ion battery pack company Trontek –

“The budget is pragmatic and has taken the right steps towards advancing green mobility adoption in the country. Extension of customs duty exemption on Li-ion cells and removal of customs duty on imported machinery used for manufacturing Li-ion batteries will bring down the cost of EV batteries, thereby reducing the cost of EV adoption. Going forward, we are certain that the Government will also look at bringing a PLI scheme for battery pack manufacturers and also reduce GST on batteries to benefit the many MSMEs operating in the EV sector.”

Mr Kalyan C Korimerla, MD & Co-Promoter, Etrio Automobiles –

“We applaud the budget for making Green Growth one of the top 7 priorities. The Pro-EV budget focuses on much-needed initiatives such as Customs Duty reduction from 21% to 13% on Lithium Cells and an extension of the subsidies on EV batteries for one more year. These are welcome initiatives as these will help boost the demand. The policy on the replacement of old polluting vehicles should accelerate the transition towards electric vehicles which is in line with the budget’s aim to spur eco-conscious lifestyles. Overall, we are happy with the budget as it is inclusive and progressive and will encourage investments in the EV sector.”

Visakh Sasikumar, CEO & Co-founder, Fyn mobility –

This is undoubtedly a future-looking announcement which will help India to become one of the prominent players in the green hydrogen space and thus reducing the dependency on lithium. With the budget allocated to energy transition, we will see a lot of businesses turning to EV fleets. Green credit system will ensure that the startups and MNC’s who is working for making the planet a sustainable place to live are incentivized. The viability gap funding will ensure that new battery tech will get supported in the early days before it attains economies of scale.

Customs exemption on capital goods and machineries for lithium batteries will reduce the per kilowatt-hour cost of batteries and thus accelerate EV adoption in both personal and commercial segments.

Mr. Pankaj Sharma, Co-Founder & Director, Log9 Materials: 

“The government’s decision to extend the concessional duty on lithium-ion cells for batteries for another year is definitely welcoming as it would sustain the ongoing momentum within the Indian EV sector. Considering EV batteries account for approx upto 60% of the EV cost, this relaxation will make electric vehicles more affordable and hence enhance the EV adoption rate.”

Mr. Saurav Goyal, Co-Founder and COO of Metastable Materials rued the absence of any initiatives for recycling of lithium-ion batteries.

 “The government has allocated Rs 35000 crore to achieve the energy transition and net zero objectives, which will help the EV industry to work alongside them in fighting this war against the Climate Crisis. However, along with focusing on green energy growth, the government should have also introduced some policies regarding solving the major problem which pertains to the EV industry – the recycling of batteries. This will further help the government to eliminate any future hurdle in achieving the net zero target”.

Narayan Subramaniam, Co-Founder and CEO, Ultraviolette Automotive

“Electric mobility is the future, and policy support is essential for the growth of our EV ecosystem. The announcement in the Union Budget of extending concessional duty for lithium-ion cells will give an impetus to Indian manufacturers. With respect to the removal of customs duty on capital goods imported for manufacturing lithium-ion cells, this is a positive step, likely to benefit the Indian EV ecosystem in the long run. As we take strides towards achieving the Net Zero carbon emissions target by 2070, the continuation of such forward-thinking policies will be key to establishing India’s technology and manufacturing prowess on the world map.”

According to the Economic Survey 2022-23, the automotive industry is expected to play a critical role in the transition towards green energy. The domestic electric vehicles (EV) market is expected to grow at a compound annual growth rate (CAGR) of 49 per cent between 2022 and 2030 and is expected to hit one crore units of annual sales by 2030. The EV industry will create 5 crore direct and indirect jobs by 20306.