While the finance minister Nirmala Sitharaman didn't mention automobile sector in her budget speech for FY25, as per the budget estimates the government has allocated ₹3,500 crore for the production linked incentive scheme for automobile and auto components in FY25. The government had allocated this amount in the interim budget presented in February this year. For the budget estimates of FY24, the government allocated ₹604 crore, which was later reduced to ₹483.77 crore in the revised estimates of FY24.
Automobile players were anticipating some monetary support for localisation in the upcoming budget. Notably, in the economic survey of 2023-24, the government had said that the auto PLI has attracted an investment of ₹67,690 crore, of which ₹14,043 crore has been invested till March 31, 2024. So far, 85 applicants have been approved under the auto PLI scheme, which has a budgetary outlay of ₹25,938 crore from FY23 to FY27.
Notably, while the government didn't make any formal announcements regarding the FAME-III scheme (Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicle in India), as per the budget estimates, the allocation for FAME for FY25 stands at ₹2,671.33 crore as against ₹5,171.97 crore allocated in budget estimates of FY24. The five year FAME-II scheme, which had an outlay of ₹11,500 crore ended on March 31, 2024.
Meanwhile, for the National Programme on Advanced Chemistry Cell (ACC) Battery Storage, the government has allocated ₹250 crore for FY25. Similarly, as per the budget estimates, the government has allocated ₹500 crore for the Electric Mobility Promotion Scheme 2024, which the government introduced in April this year.
The union budget didn't mention any specific provisions for automotive industry, which the players were hoping for. However, the exemption of lithium, copper and cobalt from custom duties is likely to boost lithium-ion battery manufacturing in India, as government pushes for localization. Lithium and cobalt are the two main components for lithium-ion batteries.
"The 2024 Budget has continued to support the EV industry which is a great incentive for manufacturers but I still look forward to the measures that will enhance the growth, address the supply chain problems, and promote sustainable mobility. The highlight of this budget is the complete exemption from customs duties on lithium which is a key component in EVs. Additionally, the government is promoting more job creation in the manufacturing sector which will directly impact around 30 lakh youth and I am very sure that all the skilled workers will help in raising the EV market growth in India. However, I feel that the government should focus on the GST rates that are implied on the raw materials, reducing the GST on this will release the stress from the manufacturers which will automatically benefit the customers," says Akihiro Ueda, CEO, Terra Charge India.