Budget 2023-24: EV industry welcomes reduction in customs duty on lithium cells, subsidy extension on batteries

The electric vehicle industry welcomed the reduction in customs duty on lithium cells and subsidy extension on batteries announced in the Union Budget 2023-24 by Finance Minister Nirmala Sitharaman on Wednesday.

Kalyan C Korimerla, Managing Director of Etrio Automobiles told Business Today, “The Pro-EV budget focuses on much-needed initiatives such as Customs Duty reduction from 21 per cent to 13 per cent on Lithium Cells and an extension of the subsidies on EV batteries for one more year.”

"These are welcome initiatives as these will help boost the demand. The policy on the replacement of old polluting vehicles should accelerate the transition towards electric vehicles, which is in line with the budget’s aim to spur eco-conscious lifestyles. Overall, we are happy with the budget as it is inclusive, and progressive and will encourage investments in the EV sector.”

Varun Goenka, CEO and co-founder of Chargeup said that this would make manufacturing batteries cheaper in the long run.

Goenka said: “One of the most impactful decisions this time is the extension of customs duty exemption for import of capital goods and machinery required to produce lithium-ion batteries for EVs in India. This move will reduce the initial capital investment needs for the battery manufacturers and is also likely to make the batteries become cheaper as there will be a larger manufacturing base for them.”

Industry insiders believe that the decision to introduce green credit program will also pave way for EVs. Pankaj Sharma, the Director of Log9 Materials noted, “The launch of a Green Credit program will not just catalyse green technologies but in effect bring momentum towards India’s vision to become Net Zero by 2070.”

He added, ”While the decision to scrap older ICE vehicles will definitely pave way for new EV deployments, investments in the energy storage space will cement the current gaps in India’s journey towards energy self-sufficiency.”

Similar thoughts were shared by Visakh Sasikumar, CEO and co-founder of Fyn mobility. He explained, “With the budget allocated to energy transition we will see a lot of businesses turning to EV fleets. Green credit system will ensure that the startups and MNC’s who is working for making the planet a sustainable place to live are incentivised.”

In the Union Budget 2023-24, Finance Minister Nirmala Sitharaman announced an outlay of Rs 35,000 crore for priority capital investments towards energy transition and net-zero goals till 2070. Further, the FM also announced the decision to support Battery Energy Storage Systems with a capacity of 4,000 MWH with viability gap funding.

Also Read: Budget 2023-24: FM announces 50 new airports, helipads, and aerodromes to be built - BusinessToday

Also Read: Budget 2023: EV industry calls for extension of FAME 2, reduction in GST - BusinessToday