Taking a concrete step towards achieving 15% electric vehicle adoption in five years, the Finance Minister Nirmala Sitharam announced an outlay of Rs 10,000 crore.
The minister also introduced an income tax rebate amounting to Rs 1.5 lakhs for the customers of electric vehicles, which will drive the demand of electric vehicles in the Indian automotive market which has seen an 8% increase in production last year.
Additionally, the government has also requested the GST council to reduce GST rates on EVs from 12% to 5%.
These incentives would be part of the Phase-II of FAME Scheme, which commenced in April this year and will last for a period of 3 years. The intent is to promote faster assimilation of EVs in the Indian market by providing incentives to both customers and manufacturers alike.
The government has also announced exempting the customs duty on the import of electric vehicle parts and the infrastructural components needed for manufacturing plants for EVs, reducing the roadblocks for the domestic production of electric vehicles.
The budget was welcomed by the startup community with a warm response calling the decision a driving force towards the creation of the domestic EV market in India.
Bhavish Aggarwal, the co-founder of cab aggregator OLA whose sister entity Ola Electric became a unicorn, tweeted in the support of the budget.
Other stakeholders of the EV startup ecosystem namely Tarun Mehta, CEO Ather Energy, Okinawa Autotech founder Jeetender Sharma, Praveen Kharb, CEO 22 Kymko, also applauded the central government’s move to push the EVs adoption.
The Finance Minister also said that the incentives added under the Phase-II of FAME would be balanced out by increasing the special additional excise duty and road and infrastructure cess by one rupee a liter both on petrol and diesel rendering the traditional fuel alternatives costlier to the public.
Notably, NITI Aayog had asked 2/3 wheeler manufacturers to strictly adhere to the 2025 deadline for taking steps to address pollution issues in a meeting held last month. It also ordered them to submit their EV transitioning plans for their vehicles within two weeks.