Expectations from Budget 2024: Driving Automobile Sector Reforms for a Greener Future

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Anticipating Reforms for a Sustainable Future

As the Centre prepares to present Budget 2024, industry experts from the automobile sector eagerly anticipate significant reforms. To achieve net-zero carbon emissions, Finance Minister Nirmala Sitharaman faces a pivotal moment to implement changes that will shape the future of transportation.

Net-Zero Carbon Emissions: A Multifaceted Approach

Achieving net-zero carbon emissions is a critical objective that requires a comprehensive strategy. Experts highlight the importance of policy continuity and the introduction of strategic measures to accelerate the adoption of electric vehicles (EVs).

This includes integrating EV services into the priority lending scheme and reducing the GST for EV-related services from 18% to 5%. Such measures are expected to significantly boost EV-led delivery adoption.

Recognizing Last-Mile Delivery

One key aspect of these reforms is recognizing last-mile delivery as a distinct sector under logistics policies. Establishing industry standards and supporting gig delivery partners with tailored schemes are essential steps.

These initiatives aim to enhance efficiency and promote growth in this vital, yet often overlooked, segment of the logistics industry.

Voices from the Industry

Akash Gupta, CEO & Co-founder of Zypp Electric

Akash Gupta emphasizes maintaining policy continuity to achieve net-zero carbon emissions. He advocates for the inclusion of EV services in the priority lending scheme and a reduction in GST from 18% to 5%. Gupta believes that recognizing last-mile delivery as a distinct sector and establishing standard operating procedures (SOPs) will enhance efficiency and foster growth.

Jayapradeep Vasudevan, CBO of Raptee

Jayapradeep Vasudevan points out that the gradual phase-out of FAME 2, with the EMPS currently offering a benefit of just Rs.10,000 per two-wheeler, necessitates support for OEMs in manufacturing batteries and EVs.

He argues that this will alleviate the pressure on OEMs, who are dealing with higher manufacturing costs and customer price sensitivity. Supporting OEMs will help India achieve its mission of 50% EV penetration by 2030.

Samkit Shah, Cofounder of Jitendra EV

Samkit Shah calls for special packages with financial incentives, subsidies, and tax breaks for MSMEs in the EV sector. He highlights the importance of improved credit access through initiatives like Priority Sector Lending (PSL) to provide essential funding for expansion and innovation. Shah also emphasizes the need for targeted incentives for local manufacturing, R&D, and technological advancements to foster inclusive growth and enhance MSME competitiveness.

Enhancing the FAME Scheme

Extending and enhancing the FAME scheme is crucial for sustained growth. Experts suggest introducing FAME III, with broader incentives for all EV types and targeted MSME support.

FAME III should prioritize developing a robust charging infrastructure and standardizing battery swapping to streamline operations, enhance safety, and reduce consumer costs.

Conclusion

As Budget 2024 approaches, the automobile industry eagerly awaits reforms to drive the sector towards a sustainable future. By focusing on policy continuity, supporting last-mile delivery, and providing targeted incentives for MSMEs, the government can pave the way for a greener and more efficient transportation system.

The proposed changes aim to accelerate EV adoption, enhance industry standards, and promote inclusive growth, ultimately contributing to India’s mission of achieving net-zero carbon emissions.