Ficci seeks PLI 2.0, tariff review to boost electric vehicle growth

The Federation of Indian Chambers of Commerce and Industry (Ficci) has urged the government to launch a second phase of the production-linked incentive (PLI) scheme (PLI 2.0), tailored to startups and smaller players in the electric vehicle (EV) sector. It also recommended a review of tariffs and duty structures to strengthen the industry's competitiveness and support the "Make in India" initiative.

 

Addressing the Ficci 97th annual general meeting and convention, Sulajja Firodia Motwani, chair of the Ficci committee on electric vehicles and chief executive officer of Kinetic Green Energy & Power Solutions, stressed the importance of these measures in driving inclusive growth, innovation, and exports.

 

“The PLI scheme has been successfully implemented but largely caters to a few large organisations. A graded PLI 2.0 could encourage inclusive growth by supporting startups and small players, driving innovation, competition, and exports while bolstering the Make in India initiative,” Motwani said.

 

She also called for a review of tariff and duty structures to safeguard domestic manufacturing as incentives under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME-II) scheme taper off. “While FAME-II has driven localisation over the past three years, we now face a fragile window where imports could become a threat,” she noted.

 

Currently, the EV sector benefits from two PLI schemes—one for automotive and auto components, with a budget of Rs 25,938 crore, and another for advanced chemistry cells (ACC), allocated Rs 18,100 crore. However, stringent compliance requirements under these schemes have largely excluded smaller players.

 

For instance, eligibility for the auto original equipment manufacturer (OEM) PLI requires global group revenues of at least Rs 10,000 crore and investments in fixed assets of Rs 3,000 crore. Similarly, the ACC PLI mandates Rs 225 crore investments per GWh and a domestic value addition target of 60 per cent within five years.

 

Earlier this week, Motwani highlighted the need for reductions in goods and services tax (GST) rates on EV batteries and charging services to make electric mobility more affordable. While the GST on lithium-ion batteries was reduced from 18 per cent to 5 per cent in 2022, replacement batteries and EV charging services continue to attract higher rates of 18 per cent.

 

Motwani highlighted the disparity in GST rates, noting that while EVs themselves are taxed at 5 per cent, replacement batteries attract an 18 per cent tax. She urged the government to align the GST on batteries and charging services with the 5 per cent rate applied to EVs.