Powered by

Home Environment Stories

Union Budget 2023: Understanding the Electric Vehicle sector in India

Union Budget 2023: An electric vehicle (EV) is a vehicle that employs one or more electric motors for propulsion.

By nayanikaphukan
New Update
support to electric vehicle industry in the budget 2023

                                                                                                                                                                                        An electric vehicle (EV) is a vehicle that employs one or more electric motors for propulsion. It may be run on energy from extravehicular sources using a collector system or run on its own using a battery. The battery would be occasionally charged by solar panels, fuel cells, or a generator to turn fuel into electricity. Due to their very low to zero carbon emission, low noise, high efficiency and flexibility in grid operation and integration, electric vehicles (EVs) are a promising technology for achieving a sustainable transport sector in the future.

Read more: How Do All-Electric Cars Work?

EV sector in India

India has set the national target of achieving 30% EV sales penetration by 2030. The government has launched the National Mission on Transformative Mobility and Battery Storage to promote the localization of EV component manufacturing. Despite efforts by the government, the market in India hasn’t picked up as expected.

According to an analysis by NITI Aayog, the adoption of EVs across vehicle categories is uneven. Almost 79% of the EV addition is from the three-wheeler segment followed by two-wheelers which are 17%. And, four-wheelers contribute only 3% towards the overall EVs on the road.

Read more: Status quo analysis of various segments of electric mobility and low carbon passenger road transport in India | Foreword by NITI Aayog

As per the same analysis, the two-wheeler EV segment has grown at a compound annual growth rate (CAGR) of 62% in the last four years (FY16-20). With the drop in battery prices and the fall in prices of two-wheeler EVs, sales are expected to reach almost 24% in 2024.

Currently, the three-wheeler EV segment is driving the electrification of the Indian automobile industry. Uttar Pradesh accounts for the highest number of three-wheeler EV population among other states in India.

Uttar Pradesh, Delhi, West Bengal, Bihar, Assam, Rajasthan, Uttarakhand, Haryana, and Jharkhand contribute to around 96% of total three-wheeler EVs in the country.

Read more: Round table to promote Electric Vehicles

Policy initiatives to increase EV penetration

  1. Faster Adoption and Manufacturing of Electric Vehicles in India II (FAME India II)
  2. National Programme on Advanced Chemistry Cell (ACC)
  3. Productivity Linked Incentive (PLI) scheme for Automobile and Auto Components

Future scenario

A report titled ‘Forecasting Penetration of Electric Two-wheelers in India’ launched by NITI Aayog and Technology Information, Forecasting and Assessment Council (TIFAC) analyzed the future penetration of two-wheelers in the country considering eight scenarios. In an optimistic scenario, the report forecasts 100% penetration of electric two-wheelers in the Indian market by FY 2026–27. In another scenario, which is technology driven and where current incentives are withdrawn by 2024, the report predicts 72% penetration by 2031.

Union Budget 2023

In the Union Budget 2023, Nirmala Sitharaman has extended custom duty exemption on manufacturing of lithium-ion batteries and announced viability gap funding to promote 4000 MWh energy storage system projects in India. Exemption from customs duty has been given on the import of capital goods and machinery required for lithium-ion cell manufacturing.

Custom duty on premium vehicles that come with completely built units (CBU) has been increased to 70 percent.

Under the Scrappage Policy 2022, more funds have been allocated for scrapping old vehicles, as well a 25 percent rebate in road tax has been announced for those who buy new vehicles by scrapping old vehicles.

A support fund has been announced in the budget so that Indian companies can come up with storage projects in India.

Read More on Environment Budget 2023

Follow Ground Report for Climate Change and Under-Reported issues in India. Connect with us on FacebookTwitterKoo AppInstagramWhatsapp and YouTube. Write us on [email protected].