Budget 2023: EV industry calls for extension of FAME 2, reduction in GST

The electric vehicle (EV) industry has called for an extension of the FAME 2 subsidy through 2024 from Budget 2023-24. FAME 2 or Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (II) is a Government of India scheme to promote EV sales by providing a subsidy of Rs 15,000 for end customers of two-wheeler EVs.

Pritesh Mahajan, Co-Founder and CEO of Revamp Moto told Business Today, “One of the first and most important aspects that we are looking forward to and highly suggest is the extension of FAME 2 to continue through 2024.”

Similar thoughts were shared by Pratik Kamdar, Co-Founder of Neuron Energy. He told Business Today, “The FAME II Subsidy Program has been effective in encouraging EV adoption in India and we call for its extension beyond March 2024.”

He also noted that the industry would benefit from a reduction in GST rates on batteries. He said, “The EV industry is expecting a GST cut from 18 per cent to 5 per cent on lithium-ion battery packs and cells. The Indian electric vehicle (EV) sector, which mainly relies on batteries, would benefit if this transformation were to occur.”

Industry insiders also seek Product Linked Investment (PLI) schemes for EVs and ancillary products. Kamdar said, “PLI scheme for battery pack manufacturers as a means of supporting the EV market and making electric vehicles more affordable and accessible to customers is required. This will ensure that sufficient capacity will be available to meet the anticipated demand for electric vehicle batteries.”

Mahajan added to this and said, “We strongly recommend a reduction in custom duty for lithium-ion cells along with research and development incentives for advanced battery technologies and additional subsidies on it.”

The founder of Revamp Moto also suggests that PLIs should also help small startups and MSMEs enter the industry as opposed to current schemes that only support big corporations. 

“The government should introduce a PLI scheme for SMEs and startups, as currently, it only favours corporates investing above 500 Crores,” he added.

Banwari Lal Sharma, CEO of Consumer Business at CarTrade Tech called for an ease in Foreign Direct Investment norms in the Indian EV industry. He said, “We expect the Union Budget to focus and to bring the highly anticipated push to the EV industry of the country, ease of FDI norms to attract more investment, and lastly, various incentives that strengthen the industry with new demand for both passenger vehicle and commercial vehicle segments.”

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