You are currently viewing What’s stopping Indians from buying EVs?, Auto News, ET Auto

What’s stopping Indians from buying EVs?, Auto News, ET Auto

<p>Offering tax breaks to manufacturers is equally essential to stimulate the auto industry's shift towards EV production. </p>
Offering tax breaks to manufacturers is equally essential to stimulate the auto industry’s shift towards EV production.

Electric vehicles are set to charge up India’s roads in the coming years. The sector achieved a milestone by surpassing 1.5 million unit sales in calendar year 2023.

EV penetration, however, remains relatively low, constituting only about 1% of total car sales in the country at present, despite the government’s push in the form of various incentive schemes. The adoption of 4-wheeler EVs for private use remains limited, with only a small number of Indian buyers going electric thus far.

So, what’s stopping Indians from buying EVs?

Going by the findings of a pre-Budget ET Online survey, the answer is the lack of charging infrastructure. In the survey, 51.7 % of the respondents said that in order to expedite EV adoption in India the government must improve charging infrastructure. The Indian buyer’s hesitation has primarily to do with inadequate charging infrastructure in the country.

According to MS Chugh, Founder & Chairman, Aponyx Electric Vehicles, “We expect the budget to allocate funds and incentives for the rapid expansion of EV charging networks which will encourage public-private partnerships and streamline regulatory processes for quicker installations. Research and development grants should be prioritised to promote innovation in charging technologies and battery efficiency. Public awareness campaigns should also be funded to educate and dispel myths about EV adoption.”

He added, “Collaboration with state governments is crucial to creating a standardised approach to EV infrastructure development and encouraging a cohesive and coordinated effort.”

Samarth Kholkar, Co-founder & CEO, BLive, said “Lack of charging infrastructure, leading to range anxiety, is one of the biggest obstacles in the rapid adoption of EVs in India.”

According to Kholkar, the government needs to focus on three key aspects to enhance charging infrastructure in India:

  • High Availability
  • Lower set-up cost
  • Increase awareness about EVs

“To increase charging stations for EVs, more financial incentives such as tax credits, subsidies and low-interest loans must be given to businesses and homeowners for setting up charging stations. The government also must come up with a policy that accelerates the collaboration with private companies to develop charging infrastructure,” Kholkar said.To reduce the cost of setting up charging stations, the government must incentivise solar-based charging, he added.While taxes on EVs in India are already not very high, a notable 27.1 % of survey respondents believe that the government should reduce taxes on EVs.

On making EVs more attractive to both buyers and manufacturers, Chugh said, “We expect the government to implement tax-related measures. incentivising consumers through tax credits or subsidies for purchasing EVs can significantly boost adoption rates. This aligns with the sentiments expressed in the survey, where 27.1% of respondents suggested that the government should reduce taxes on EVs.”

A notable suggestion from the survey is to offer tax exemptions, such as up to INR 1.5 lakh on the interest paid on the loan amount for EV purchases. This will not only reduce the overall cost of ownership for consumers but also act as a powerful motivator for potential buyers to choose EVs over traditional vehicles. Production-linked incentives, particularly for advanced battery storage, can further incentivise local cell manufacturing, contributing to a self-reliant and sustainable EV ecosystem.

Offering tax breaks to manufacturers is equally essential to stimulate the auto industry’s shift towards EV production. Moreover, the government can provide tax incentives directly to EV purchasers.

Kholkar suggested reducing GST on batteries from 18% to 5% will result in a decrease in the cost of EVs for consumers, making them more affordable for a large segment. Also, slashing custom duty on importing certain EV spare parts will enable manufacturers to allocate more resources towards R&D and improve the overall quality of EVs.

Budget: Incentives for EV makers

A good 11 % of respondents feel that incentivising auto-makers is also needed for electrifying India’s big EV push. In the upcoming interim budget on February 1, the government is likely to introduce an extended third phase of the incentive program for electric vehicles. According to a senior government official who spoke to ET, this enhanced phase aims to bolster mass transportation and promote alternative fuels. The budget is expected to allocate a substantial sum, ranging between INR 10,000-12,000 crore, for the third installment of the Faster Adoption & Manufacturing of Electric Vehicles (FAME) scheme.

Chugh said, “A reduction in the GST on EV components would enhance affordability and make EVs more appealing to Indian consumers. Further, the extension and reinforcement of the FAME subsidy scheme is imperative for continued industry growth, therefore, requiring a smooth transition from FAME II to FAME III.”

Safety concerns

For 10.2% survey respondents, the safety of EVs remains a concern.

A comprehensive budgetary approach that encompasses GST reductions, subsidy extensions, infrastructure incentives, R&D support, awareness campaigns, and state-level collaboration will provide the necessary impetus for the sustainable growth of the electric vehicle ecosystem in India.

The Economic Survey in 2023 projected an impressive Compound Annual Growth Rate (CAGR) of 49 % for India’s indigenous EV market from 2022 to 2030. This growth trajectory is expected to result in an estimated annual sales volume of close to 10 million units by 2030.

  • Published On Jan 25, 2024 at 10:47 AM IST

Join the community of 2M+ industry professionals

Subscribe to our newsletter to get latest insights & analysis.

Download ETAuto App

  • Get Realtime updates
  • Save your favourite articles

Scan to download App

Source link

Leave a Reply