India’s fledgling electric vehicles (EV) industry has welcomed tax breaks and incentives in Finance Minister Nirmala Sitharaman’s Budget presented on Friday.
Sitharaman told Parliament GST on EV will be reduced from 12% to 5% and the government will provide additional income tax deduction of Rs 1.5 lakh on the interest paid on the loans taken to purchase electric vehicles.
Entrepreneurs and industry experts described as inspiring the government’s commitment of Rs 10,000 crore on FAME 2 (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles).
“This further reinforces Ola’s mission to build Electric Mobility for India and the world and contribute toward making our nation, the global hub for innovation in this space,” said Bhavish Aggarwal, co-founder and chief executive of Ola. Ola Electric Mobility raised $250 million from billionaire investor Masayoshi Son’s SoftBank.
Reducing GST and the additional income tax reduction will encourage consumers to purchase EVs. “It addresses the concern of the upfront cost of purchasing electric vehicles. This is the best example of a consumer-driven change and is also how Ather envisions the EV sector to achieve scale and growth,” said Tarun Mehta, co-founder and chief executive at electric scooter company Ather Energy.
“It now becomes imperative that OEMs (original equipment manufacturers) chalk out plans that allow the industry to scale up and meet the demand for compelling products,” said Mehta, whose firm in May raised $51 million in a funding round led by Flipkart co-founder Sachin Bansal.
Vineet Mehra, managing director of electric mobility services company DOT, said the reduction in GST and tax rebate will push demand in the sector. “However, specific financial option for the purchase of EVs by aggregators and e-logistics players is still not addressed in the budget,” said Mehra whose firm offers services through its fleet of two- and three-wheeler electric vehicles. It counts companies such as Amazon, Walmart, BigBasket and Swiggy among its customers.
Anand Ayyadurai, chief executive and co-founder at scooter-sharing startup Vogo, said the strong focus on EV in the budget will speed up the push for clean mobility in India. This would help the firm add significantly more electric vehicles to its fleet. “With electric scooters available on rent, India's shift to e-mobility will be much faster and smoother, thereby, enabling us to kick-start a clean mobility revolution in India,” said Ayyadurai. Last year in December, the firm formed a strategic partnership with Ola, where the ride-hailing giant will boost Vogo’s supply by investing in 100,000 scooters on the Vogo platform, worth $100 million. Its offer will be available for Ola’s customer base of over 150 million, directly from the Ola app.
Vivekananda H.R., chief executive and co-founder of Bounce, a bike and scooter sharing firm, said the Budget emphasised on jobs, clean transportation, connectivity, and funding towards research and development. “This budget is a boost for mobility players like Bounce to make stronger and faster inroads into EV,” said Vivekananda, whose company in June this year raised $72 million in a series C financing round led by B Capital Group and Falcon Edge Capital.
In June, home-grown e-commerce company Flipkart unveiled plans to introduce EVs for its last-mile deliveries across the country. The aim is to replace nearly 40 per cent of its existing last mile fleet of delivery vans with EVs by March 2020. Kalyan Krishnamurthy, group chief executive officer, Flipkart, had said that his team is working with local ecosystem partners to co-design concepts for electric vehicles best suited for the growing e-commerce industry.