Budget 2021 expectations-what SMEV says
When a new year starts everyone (especially people connected to economic activities-businessman, manufacturers, market experts etc) eyes will be on the budget. The budget will be for the new financial year which starts from 1 April 2021 will be presented on 1 February 2021 by India’s Honorable Finance Minister Nirmala Sitharaman.
As the world has suffered from a global COVID19 pandemic, the people of India have a lot of expectations from Budget 2021 as the pandemic has already affected the lives and economy of the people. Through the Union Budget, many sectors have high hopes for government support to recover the losses caused by the pandemic. Let us look at what is there for the Electric Vehicles sector in the budget list of 2021.
Budget 2021 expectations
The Finance Minister as described her upcoming for 2021 will be unlike anything seen in the last 110 years. Here are some of the expectations from the Budget 2021 are:
The Society of Manufacturers of Electric Vehicles (SMEV) has asked Finance Minister Nirmala Sitharaman to either rejig the FAME II scheme or reintroduce FAME I. Seeks reduction of GST on EVs sold without battery.
SMEV Director General Sohinder Gill wrote in a letter to Sitharaman, “For a nascent and disruptive industry like EV that is heavily dependent on government policies, there needs to be an effective approach that would drive the market of EVs in the country. The industry is still lagging behind the desired target.”
He further said, “our analysis shows that efforts must be made to generate demand and we believe that this can be easily done by the government’s intervention relating to streamlining, ironing out policy details and adequate announcements in Budget 2021-22.” Gill suggested the reintroduction of FAME I or rejig of the FAME II scheme.
Gill also said that the EV industry is hugely dependant on government policies, that will help the industry to boost up the market.
The imposition of a notional green cess on the polluting vehicles and use it to accelerate electric mobility. Reduction on GST on EV sold without battery, at present it is 28% on lithium-ion battery and vehicle with battery is taxed at 5%.
- The buyers of EV can benefit from a deduction of up to Rs 1,50,000 for interest paid on loans to buy EV, subject to certain conditions. Amendments should be brought to incentive purchase of such assets even where a loan is not availed.
- The next thing the government should focus on is to restore millions of lost jobs to boost the demand. According to a private think-tank Centre for Monitoring Indian Economy Pvt. latest data, 38.7 million Indians were unemployed in December, this is such a huge number that is beyond our imagination.
- Job creation will not only help in boosting the economy and in production but also removes unemployment from the country which was created particularly during the pandemic. According to CMIE, the jobless rate recorded higher to 9.1% in December, the highest since June.
- The budget expectation for the startup companies is to remove all forms of taxes (direct and indirect) on any startup company created anywhere in India till it reaches a revenue of Rs 500 crore, or 12 years, whichever is earlier.
- Allow investors to write off unsuccessful startup investments without burdensome questions.
- Extend the tax exemption for startup investors for a period of 12 years, or till the sale or transfer of such investment, whichever is earlier.
- Startups are expected to scale and expand in 2021, especially with the ‘Make in India’ and ‘Aatmanirbhar Bharat’ initiatives promoting entrepreneurship in a significant way among young aspirants.
The budget 2021 will mainly focus on
- Healthcare & Infrastructure are major concerns
- Ease of finance to EV manufacturers
- GST reduction
- EV manufacturers
- Battery manufacturers
- Insurance companies providing loans on vehicles
Related: Previous budget list 2020
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