GST for EVs still an issue? Budget 2020 what EV experts are saying 

During the Union Budget 2019, the Finance Minister, Nirmala Sitharaman announced the various initiatives taken by the government for the growth and promotion of eco-friendly mobility. GST for EVs still an issue? Budget 2020, let us see what our EVs experts are saying about the GST on 

The government aims to make India a global hub of manufacturing of EVs. Finance Minister, Nirmala Sitharaman announced that the government aims to make India a global hub of manufacturing of EVs. Inclusion of solar batteries and charging infrastructure will boost our efforts. Govt has already decided to lower the GST rate on EV from 12 to 5%. Also to make EVs affordable to consumers our govt will provide additional income tax deduction of 1.5 lakhs of rupees on the interest paid, on loans taken on purchase EVs, which means this amounts to a benefit of 2.5 lakh crores over the loan period to the taxpayer who takes loans to purchase EVs.”

GST for EVs still an issue? Budget 2020

The GST on electric vehicles reduced from 12% to 5% has benefited the electric vehicles manufacturers, however, the GST on raw materials is still a huge concern for the manufacturers and operators.

What EV experts are saying?  

Cofounder ION Energy

The cofounder ION Energy, Akhil Aryan said, “The government needs to do more to support the localization of battery technology that power electric vehicles. Lithium-Ion Batteries that form close to 40% of the cost of an electric vehicle attract GST of 18%. The government should consider reducing the GST rate and encouraging companies to set up battery manufacturing plants in the country through tax exemptions.”

Gemopai Electric cofounder 

Gemopai Electric cofounder Kshitij Kumar said, “If the government could reduce the GST on Lithium batteries from 18% to 5% that would be a major reduction in cost. This will reduce the cost of electric bikes by almost 10%.”

Cofounder of Emflux Motors

The Cofounder of Emflux Motors, Ankit Khatry commented agreeing the GST on raw materials cost is a pain for many companies mainly who are importing, “Luckily, we do not have to depend a lot on importing as we are developing all the technologies for e-drivetrain and other EV related products in-house.”

He also said that, for startups, it will be a great deal if the government takes some initiative on this concern and tie-up with li-ion cells companies and electronic parts companies that will help in reducing the cost and MOQ ( minimum order quantity) for the raw materials.

Co-founder and CEO of Yulu

Amit Gupta, Co-founder and CEO of Yulu said, “What it means that if a consumer is taking a ride on Yulu and pay INR 100 for a trip, out of that INR 100, we have to pay 18% GST. We want this to be reduced to 5% for the EV rides. With this, the GST will be on par with the input credit and ultimately this will benefit the consumers and help them prefer EV rides over ICE.”

Gupta said, “Today what’s happening if I want to buy EVs, I will have to pay either a lot of interest as it is being considered as a personal loan or I will have to raise equity money and buy that. Both of them are not sustainable in the long run. For instance, If we consider buying 1 Mn electric bikes, we need to have over $500-600 Mn to buy the asset which is a significant amount of money for any company.”

“Right now, we are paying a 1.5-2x interest rate on EVs in comparison to what we have to pay on ICE vehicles.”

Gemopai’s Kumar said, “We are suffering from lack of awareness and finance. The nationalised banks are not ready to finance us, even on the registered vehicles. That is a bigger challenge. I won’t mind if subsidies are removed and the government diverts them to the banking sector enabling them to finance us.”

He added that the significant amount of funds allocated to the EV under FAME should also be spent on customer education. Indian EV manufacturers don’t have enough money to spend separately on customer awareness.”

On an innovation point of view, Aryan says India is lacking in the right engineering talent for building an ecosystem for electric vehicles and battery production.

IIT-Hyderabad Collaboration with ItsEV

If we remember, recently IIT Hyderabad collaborated with the Japanese company ItsEV for the development of Li-ion batteries for electric vehicles. Similarly, the government must take such kind of initiatives and encourage private players to invest in research and development projects with universities and campuses all over India.

For R&D, Emflux Motors is finding opportunities with various national institutes in the country. With regard to this Khatry said, We have attended quite a few events promoting their EV sector from different countries sponsored by the Government of their respective countries. We think if we also want to be dominant in the EV segment we should also start providing our essential tech/Design to different countries and government help in the same will help a lot of startups.”

So, let us hope these concerns are taken into the Union Budget 2020.

(Source inc42 )

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