Union Budget 2023 may announce sops for domestic EVs and storage solutions

Custom duty exemptions being provided for lithium-ion cells for making phone battery packs could be extended to EV batteries and energy storage solutions as well

In the upcoming Union Budget 2023-24, the central government is considering announcing incentives to promote the domestic production of electric vehicles (EVs) and energy storage systems (ESS), reported the Economic Times citing official.

According to the report, the aim is to help India achieve its electric mobility targets. 

Additionally, the government may reduce the existing import fee of 5 per cent to 20 per cent on various parts used to make lithium-ion batteries.

The official said that discussions are happening regarding enhancing the manufacturing of the entire ecosystem related to electric transportation. Some proposals on reviewing the duties are being examined, said the official. 

To encourage domestic manufacture of EVs, taxes on items like synthetic separators, anodes, and cathodes used in lithium-ion batteries could be reduced.

Between April and September of the financial year 2022-23, India purchased lithium-ion batteries worth $1.32 billion. This is less than the purchases worth $1.83 billion made during FY 2021-23.

To further promote EVs, a production-linked incentive (PLI) scheme worth Rs 25,938 crore has been rolled out by the central government for automobiles and auto parts, which includes electric vehicles. 

For advanced chemistry cells, there is a separate Rs 18,100 crore PLI to promote domestic battery manufacture and bring down prices.

Although operating expenses are low, states have been encouraged to eliminate the road tax on EVs to help reduce purchasing costs.

The Rs 10,000 crore Faster Adoption of Manufacturing of Electric Vehicles (FAME) scheme of the government brings together the incentives India has put in place to transition to EV-based transportation systems that are more environment friendly, sustainable, technologically advanced, and efficient.

The government has decreased the goods and services tax on electric vehicles to 5 per cent from 12 per cent and 5 per cent from 18 per cent for chargers and charging stations. Test guidelines for lithium-ion traction battery packs and systems for electrically powered road vehicles have also been made available by the Bureau of Indian Standards.