- Electric vehicles likely to get cheaper
- New personal income tax regime announced
India’s Finance Minister, Nirmala Sitharaman presented the Union budget 2023-24 with a strong focus on green energy and making electric vehicles affordable to the masses. Interestingly, the government has also increased the income limit from 5 lakh to Rs 7 lakh in the new regime.
Here are the top highlights for the auto sector in the Union Budget 2023.
Electric vehicles (EVs) are likely to be cheaper
The government has announced the removal of customs duty on the import of specified goods and machinery required to manufacture lithium-ion batteries for EVs. This eventually is expected to reduce the price of locally built EVs in the country. The new announcement is likely to encourage electric vehicle manufacturers in the country to increase their product line-up.
Stronger focus on flex-fuel vehicles
The Indian government has denatured ethyl alcohol (also known as Ethanol) for use in the manufacture of industrial chemicals. The government plans to boost ethanol production and expects vehicles to be fully flex-fuel-ready by 2025. The cars are required to be ethanol-material compliant from April 2023.
Special emphasis on vehicle scrappage policy
The finance minister stated that more funds will be allocated to scraping old vehicles, including ambulances of the central and state government. As for the masses, there is no change in benefits for the scrapping of private vehicles. The new development will benefit auto manufacturers in the country.
Sharing his opinion on Union Budget 2023-24, Banwari Lal Sharma, CEO, Consumer Business, CarTrade Tech Limited, said, 'The Union Budget 2023-2024 announced by Finance Minister Nirmala Sitharaman is progressive, prudent and growth-led, with an eye to provide impetus on the savings of the public. It is a 'green budget' for the automotive and mobility sectors. The sustainability measures taken through announcements on green hydrogen and other energy sectors will help in furthering the government’s target of carbon neutrality by 2070. The increased Capex outlay on energy transition is likely to spur investments and skill development in a green economy.
The viability gap funding for battery energy storage systems is also likely to create critical infrastructure, while custom duty reduction on capital goods for Lithium batteries manufacturing will facilitate faster adoption of EVs.
Increase in spending on infrastructure, setting up of 50 new airports and heliports, creation of 100 transport infrastructure projects are welcome moves, in addition to the central support for replacing old vehicles. All of these should drive consumption and overall demand of vehicles.'
