Budget 2024: Shaping India's solar and EV landscape
Authored by Raman Bhatia, Founder & Managing Director, Servotech Power Systems Ltd
Expectations for the EV Industry in Budget 2024
As we approach the announcement of Budget 2024, various industries, including the EV sector, are setting their expectations. The EV Industry, poised to transform India's transportation, requires a strong emphasis on upskilling and reskilling through centrally sponsored schemes, essential for cultivating a skilled workforce in this evolving field. Sustainable growth in the EV sector hinges on technological advancements to reduce costs, improve range, and innovate charging infrastructure. Crucial to this evolution is the development of Battery Management Systems (BMS) and the establishment of domestic battery manufacturing capabilities.
The government's focus should be on funding charging infrastructure in Tier II and III cities, promoting open data standards and APIs for interoperability and a robust software ecosystem. Reducing GST on lithium batteries from 18 to 5 per cent could significantly decrease EV costs and boost market appeal.
Supporting ICE+EV hybrid vehicles, particularly in smaller segments, is vital for economies of scale. State and Central Government policies incentivising these hybrids through investment strategies and sponsored schemes are eagerly anticipated.
The EV industry also seeks the targeted implementation of Production-Linked Incentive (PLI) schemes for EV charging firms. Continued support, including tax deductions for EV buyers and extensions or enhancements of the FAME-II subsidies, reaffirms the commitment to an eco-friendly transition.
The automotive sector is keenly awaiting updates on the GST framework, especially for entry-level two-wheelers, and anticipates new initiatives like FAME 3 and revised GST rates for electric two-wheelers. A uniform 5 per cent GST on all EV spare parts to match the rate on vehicles is a key industry demand. Further, reducing the GST on batteries to 5 per cent would be a significant step, aligning battery swapping and subscription services with the trajectory of EVs.
Solar Industry Outlook for Union Budget 2024-25
The upcoming Union Budget 2024-25 is crucial for India's green energy ambitions, particularly the solar industry. Prioritising indigenous development and local manufacturing of solar panels to reduce reliance on imports is essential. The budget should support technology transfer and offer incentives to boost local production, thereby conserving foreign exchange.
The renewable manufacturing PLI scheme and viability gap funding for battery storage are pivotal for achieving India's energy goals. Revising GST rates in the renewable sector and increasing budget allocation for battery development under PLI schemes are urgent requirements. Developing the workforce through AI technology, bulk procurement, and energy storage solutions is necessary for enhancing sector efficiency.
Strengthening infrastructure, fostering public-private partnerships, and streamlining regulations are key to establishing a sustainable energy future. Incorporating solar panels in new housing projects and encouraging green foreign direct investment (FDI) initiatives are expected.
Recommendations include reducing customs duties on solar imports, enhancing concessional finance, and establishing a dedicated agency for sector investments.
Addressing state restrictions on transformer capacity, advocating for unrestricted net metering, and extending the ISTS waiver are crucial steps. A reduction in customs duty on solar cells, an extension of the Approved List of Models and Manufacturers (ALMM), and reduced project implementation times are necessary to support domestic solar manufacturing. These measures will shape India's energy landscape and reinforce its global position in sustainable practices.