Pune: Even as the finance minister Nirmala Sitharaman did not mention automobile sector in her budget speech for FY25, electric vehicleelectric vehicle (EV) adoption in the country, and a reduction in taxes for hybrid vehicles.
But the auto sector was given the exemption from customs duties for lithium, copper, and cobalt, which can help lithium-ion battery manufacturing in India. Lithium and cobalt are the two main components of lithium-ion batteries.
Vinod Aggarwal, President, SIAM and MD & CEO of Volvo Eicher Commercial Vehicles, said the liberal allocation for rural development and infrastructure of Rs 2.66 lakh crores will boost the rural economy.
He said measures for skilling and upskilling and support to manufacturing and employment generation, support to MSMEs, many of whom form the large supplier base for the auto sector, exemption of customs duty on import of Lithium, Cobalt and other rare minerals and extension of concessional customs duty on Li-Ion Cells till March 2026 and withdrawal of equalization levy of 2 per cent on e-transactions would continue to propel auto industry growth.
In the economic survey of 2023-24, the government had said that the auto PLI has attracted an investment of Rs 67,690 crore, of which Rs 14,043 crore has been invested till March 31, 2024.
Till date 85 applicants have been approved under the auto PLI scheme, which has a budgetary outlay of Rs 25,938 crore from FY23 to FY27.
While the government did not make any formal announcements regarding the FAME-III scheme (Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicle in India), as per the budget estimates, the allocation for FAME for FY25 stands at Rs 2,671.33 crore as against Rs 5,171.97 crore allocated in budget estimates of FY24. The five-year FAME-II scheme, which had an outlay of Rs 11,500 crore ended on March 31, 2024.
Meanwhile, for the National Programme on Advanced Chemistry Cell (ACC) Battery Storage, the government has allocated Rs 250 crore for FY25. Similarly, as per the budget estimates, the government has allocated Rs 500 crore for the Electric Mobility Promotion Scheme 2024, which the government introduced in April this year.
"The highlight of this budget is the complete exemption from customs duties on lithium which is a key component in EVs. Additionally, the government is promoting more job creation in the manufacturing sector which will directly impact around 30 lakh youth and I am very sure that all the skilled workers will help in raising the EV market growth in India," said Akihiro Ueda, CEO, Terra Charge India.
“Significant infrastructure investments, with an allocation of Rs. 11,11,111 crore for capital expenditure, will have a multiplier effect on the economy. Improved infrastructure is a boon for the auto sector, facilitating better logistics and enhancing the overall consumer experience,” said FADA President Manish Raj Singhania.
He also said the adjustments in personal income tax, including increased standard deductions and relief for salaried employees and pensioners, are welcome measures that will enhance disposable incomes, fostering a more favorable environment for auto sales.
