Union Budget and E-Vehicles | 08 Jul 2019

Income tax rebates of up to ₹1.5 lakh to customers on interest paid on loans to buy electric vehicles, with a total exemption benefit of ₹2.5 lakh over the entire loan period.
Customs duty exemption on lithium–ion cells, which will help lower the cost of lithium-ion batteries in India as they are not produced locally.
- This is in addition to the ₹ 10,000 crore allocated for EVs under the FAME II scheme.
Makers of components such as solar electric charging infrastructure and lithium storage batteries and other components will be offered investment linked income tax exemptions.
Proposal to reduce GST rate on electric vehicles from the current 12% to 5%.

According to the Economic Survey, the market share of electric cars is only 0.06 % in India when compared to 2 % in China (world’s largest EV market) and 39 % in Norway.
Reasons for lesser market presence of EVs in India are lack of charging infrastructure and high cost.

In major cities in developed markets such as Frankfurt (Germany) and others, EVs are given free parking space and in certain parts of cities only such eco-friendly vehicles are allowed.
European Union (EU) countries are also trying to evolve into a hub for developing batteries and other spare parts for electric vehicles through the Strategic Action Plan For Batteries.
- The continent hosts the countries with the largest base of electric car sales. Norway, for instance, leads the electric vehicle market—EVs comprised 46% of the total vehicles sold in the country in the year 2018.
In the US, California is legislating tough emission norms for vehicles and providing fiscal incentives for plug-in hybrid and battery electric vehicles.

The government can think of giving a mandate to leading manufacturers that they should have a certain share of their sales from EVs after a particular time period.
- The NITI-Aayog is considering a policy proposal to ban all internal combustion engine two-wheelers under 150cc by the year 2025 and three-wheelers by the year 2023.
Access to fast-charging facilities must be fostered to increase the market share of electric vehicles. Investments from private players is required for the same.