Budget 2024: Electric vehicle sector seeks comprehensive support and increased innovation

With the Union Budget 2024 approaching, the electric vehicle (EV) industry in India is bracing itself for key policy announcements. The sector, which has seen significant growth in recent years, is now at a juncture where industry leaders believe that support from the central government will help sustain the growth momentum.

That said, the Faster Adoption and Manufacturing of Hybrid & Electric Vehicles (FAME) India programme, which played a key role in driving the adoption of EVs, ended on March 31, 2024. While the programme provided the much-needed support, challenges like limited charging infrastructure and high battery costs still persist. Later, the Ministry of Heavy Industries (MHI) launched the Electric Mobility Promotion Scheme (EMPS) to increase the adoption of two-wheeler and three-wheeler electric vehicles and support the development and manufacturing of EVs in India.

The EMPS-2024, with a budget of Rs 500 crore, is scheduled to expire on July 31, 2024. It offers subsidy of up to Rs 10,000 for electric two-wheelers, up to Rs 25,000 for small electric three-wheelers and up to Rs 50,000 for large electric three-wheelers. Now that the Union Budget is scheduled to be presented to Parliament on July 23, 2024, let’s take a look at what the budget expectations of the electric vehicle industry look like.


Chetan Maini, Co-Founder and CEO, SUN Mobility, stressed on the need for comprehensive support in the upcoming budget to strengthen the EV ecosystem in India. He said, “India is paving the way for the evolution of EVs and the government is taking constructive steps towards clean mobility and adhering to net zero emission targets. In the upcoming budget, the industry is striving for a level playing field for all technologies, highlighting the need to address the disparities in GST and subsidies, especially in the case of replaceable batteries.”

“The expected measures include a comprehensive battery replacement policy, launch of FAME III with increased allocation for electric buses and proposals to encourage local manufacturing of EV components. All these are aimed at strengthening India’s EV ecosystem,” he added.

Madhumita Agrawal, Founder and CEO, Oben Electric, views the Budget as a key juncture for the growth of the EV sector. She added, “Currently, manufacturers are facing a significant cash flow squeeze due to higher GST rates on raw materials (18-28%) compared to lower GST rate on the final vehicle (5%). We hope that the Budget will address this imbalance to reduce the burden on manufacturers, ultimately passing on the cost benefits to the consumer.”

Akash Gupta, Co-founder and CEO, Zypp Electric, believes that policy continuity is key to achieving net zero carbon emissions. He says, “Inclusion in the priority lending scheme and reduction of GST on EV services from 18% to 5% will accelerate the adoption of EV deliveries. Recognition of last mile delivery as a separate sector under the logistics policy is essential,”

“Setting industry standards, supporting gig delivery partners with tailored schemes and implementing standard operating procedures (SOPs) will drive efficiency and growth in this important but often overlooked segment of the logistics industry. Expanding the existing EMPS scheme will improve stakeholder sentiment and investor confidence,” he concluded.

Niraj Rajmohan, CTO and co-founder of Ultraviolette, advocates for robust support for deep R&D and technology innovation. He notes that, “The next phase of growth for the sector will be heavily dependent on our ability to transform ourselves into an independent technology developer. We advocate for initiatives and subsidy structures without segment limits, which in turn will foster innovation and growth across multiple segments.”

“The recent discussions on the implementation of FAME 3 present a significant opportunity to increase the adoption of electric vehicles in India. In light of this, any extension of the FAME subsidy and removal of all pricing caps on ex-factory electric vehicles will be crucial to empower technology companies like Ultraviolette.”

Ashwin Bhandari, CEO and Co-founder, iVOOMi, suggests key fiscal measures for sustainable growth of the industry. He recommends, “In the upcoming budget, we propose significant integration of GST rates for batteries and scooters with an aim to create a balanced sales taxation system while considering key factors like battery technology, supply chain efficiency and market inventory. This strategic approach is poised to drive sustainable growth in the industry.”