Budget 2020: Will There Be Incentives To Buy Electric Vehicles?

There is a range of electric vehicles being launched and more will be coming this year. But will the Union Budget 2020 have more incentives for buyers of electric vehicles? That’s a question many in the auto industry are asking and putting on the wishlist which they hope Finance Minister Nirmala Sitharaman will fulfill.

The past year has seen a significant uptake in electric vehicles in the two-wheeler segment and in the passenger fleet and cargo segments. That’s because the Indian government offers commercial fleet owners purchase subsidies under the FAME II (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) Scheme as well as cuts in the goods and services tax (GST).

Vehicles that can go more than 200 Km on a single charge (powered by lithium-based battery techonology) are eligible for these subsidies.

Also Read: Budget 2020: Will There Be Respite For The Auto Industry?

These concessions are lower for individual buyers though. However, buyers can claim income tax rebate up to Rs 1.5 lakh on loans taken for electric vehicles.

Recently, electric bicycles have also been classified as electric vehicles for tax benefits. But they don’t come under the FAME II scheme of the government.

Electric two-wheeler bicycle makers like Hero Electric are hoping the government will incentivise purchase of electric bicycles – the argument being while electric cars and buses do reduce pollution, they don’t address traffic congestion on the roads.

Car dealers however expect the government to go easy on its electric vehicle policy, not forcing the hand of automakers, given the slowdown in sales.

"We are also expecting the government to align its electric mobility vision with challenges faced by automakers and auto-dealers in terms of innovation and elasticity. " - Jatin Ahuja, Founder, Big Boy Toyz

While there is a focus on incentivising electric vehicles, corporate India hopes for some more sops on the manufacturing side.

"Initiatives by the government such as the corporate tax cuts and incentivising the manufacturing of electric vehicles are great boosters for manufacturing customers. However, we believe the Government should continue to focus on ‘Make in India’ in the forthcoming budget and provide further incentives for investment in manufacturing units." - JK Gupta, CFO, Tata Technologies

Carmakers hope that while there is focus on commercial vehicles in the electric space, the budget will carry some incentives for private buyers too.

"The government’s recent announcements on the promotion of EVs in India, especially for government use and public transport, is encouraging. However, we feel that more work needs to be done to promote EV adoption in India not only in public transport but amongst private customers as well." - Rajeev Chaba, President & MD, MG Motor India

Finance Minister Nirmala Sitharaman will deliver her second union budget speech on Saturday, 1 February 2020. The stock markets will be trading that day. Follow live updates from the budget speech on The Quint.

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