EV Updates in Union Budget 2024-25
Finance Minister Nirmala Sitharaman's presentation of the Union Budget 2024–25 highlights the government's commitment to upholding policy continuity, acknowledging the significance of essential minerals, and preparing the labor force to foster innovation and sustainability in the electric vehicle (EV) industry.
EV Adoption and Critical Minerals
India aims to achieve 30% EV penetration by 2030. To reduce dependence on other countries for critical minerals essential for EV batteries and energy storage, the Budget announced the establishment of a Critical Mineral Mission. Additionally, 25 critical minerals and rare earth elements were exempted from customs duties, and the Basic Customs Duty (BCD) on two such minerals was reduced. These measures are expected to make EVs more affordable and drive mass adoption.
Production Linked Incentive (PLI) Schemes and FAME
While the Budget did not specifically announce FAME-III or lower Goods and Services Tax (GST) on EV components, it increased allocations for PLI schemes related to auto components and batteries. The government allocated Rs 2,671.33 crore under the FAME scheme for 2024-25, compared to the revised estimate of Rs 4,807.40 crore for 2023-24. The FAME scheme, launched in 2015, has significantly boosted the adoption of electric and hybrid vehicles.
Critical Minerals: A Boost for EV Affordability
The government's plan to exempt customs duties on 25 critical minerals and reduce BCD on two others will benefit the EV industry. Critical minerals like lithium, used in EV batteries, are vital for global energy security. The International Energy Agency (IEA) predicts a 40-fold increase in lithium demand by 2040. India's participation in the Mineral Security Partnership (MSP) and efforts to access these minerals will support EV manufacturing and reduce costs.
Rooftop Solarisation and EV Charging
The Prime Minister Surya Ghar Muft Bijli Scheme, aiming to install rooftop solar plants for 1 crore households, will promote renewable energy adoption and support EV charging infrastructure. Allocated Rs 6,250 crore, this initiative aligns with India's goal of boosting EV adoption, particularly in smaller cities. Rooftop solar panels offer lower per-unit electricity costs and are easy to set up in remote areas, enhancing the EV charging ecosystem.
Skilling the Workforce for the EV Industry
The Budget announced a centrally sponsored scheme for skilling 20 lakh youth over five years and revised the Model Skill Loan Scheme to facilitate loans up to Rs 7.5 lakh. Upgrading 1,000 industrial training institutes and allocating over Rs 3 lakh crore to schemes benefiting women and girls aim to enhance workforce skills and gender equality. These measures will ensure a steady supply of skilled professionals essential for the EV industry's growth.
Industry Reactions and Future Outlook
Industry leaders have lauded the Budget's focus on critical minerals and skilling. Sameer Aggarwal, CEO of Revfin, highlighted that the waiver of import duties on critical minerals would lower battery manufacturing costs. Rashi Agarwal, CBO of Zypp Electric, emphasized the importance of increasing women's workforce participation and youth skilling for the EV market's expansion. Ravi Machani, Co-Founder of Tresa Motors, stressed the need for skilled workers in areas like battery technology and power electronics.
Overall, the Union Budget 2024-25 lays a comprehensive roadmap towards transforming India into a developed economy, supporting the EV industry's growth, and contributing to India's climate commitments.
