An electric vehicle popularly known as EV uses electric motors for propulsion, using energy stored in batteries. The Finance Minister has announced a number of incentives for the EV vehicle industry in India. The Government has promised major fiscal (tax) incentives and a favourable regulatory environment for EVs in India.
Pollution in affecting major cities in India. Delhi is a prime example of what happens when a city gets polluted. Air borne diseases are just one of the problems these cities face.
The Union Budget 2019 has a lot for electric vehicles in India, but nothing much for the auto sector. The Finance Minister has also made recommendations to reduce GST on electric vehicles from 12% to 5%. This would push EVs in India. The FAME 2 scheme promotes electric vehicles by increasing electric vehicles in the commercial fleets. The Government has made an outlay of Rs 10,000 Crores for three years till 2022 for FAME 2.
Why FAME 2?
The Government has a major focus on setting up charging stations for electric vehicles. It is encouraging the participation of both PSUs and Private Sector Players in the country. Projects under charging infrastructure include electrification for running vehicles like pantograph and flash charging. FAME 2 also encourages renewable energy source interlinking to charging infrastructure.
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The Government plans to make EVs very affordable and is offering tax benefits to people who buy them. The Government is offering additional income tax deduction of Rs 1.5 Lakhs a year on interest paid on loans taken to buy electric vehicles. The total tax benefit translates to Rs 2.5 Lakhs over the entire loan period.
This is a twin benefit for both customers and electric vehicles in India. In the last year as many as 20% of electric two-wheeler retailers shut shop in India. Tax incentives would give the much needed boost to electric vehicles in India.
See Also: Should India Adopt Electric Vehicles?
There are currently very few electric vehicles in India like Tata Tigor EV, Mahindra eVerito and Mahindra e20 Plus. This is going to change Big-Time in the next few months. Many carmakers would soon launch electric vehicles in India. Maruti Suzuki India, Tata Motors, Morris Garages and Audi will soon drive electric vehicles into India. The focus now shifts to the charging infrastructure in the country.
The Finance Minister has announced custom duty exemption of 0% to Lithium-Ion batteries. These batteries are not manufactured locally and this is a great move to reduce cost of Lithium-Ion batteries. Those who manufacture components like solar electric charging infrastructure and lithium storage batteries would enjoy investment linked income tax exemptions under Section 35 AD of the Income Tax Act.
There is also a focus on reducing GST for charging and battery swapping services from 18% to 5%. (Battery swapping also called switching station is a place where a vehicles discharge battery is swapped for a fully charged one, eliminating the need to wait for the vehicle battery to charge).
See Also: Will Electric Cars Take Off In India?
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