Finance Minister Nirmala Sitharaman announced while presenting the Union Budget 2019, that there will be an additional tax benefit of Rs 1.5 lakh on the interest paid on the loans taken for the purchase of the electric vehicles (EVs). The government has also moved the GST Council to decrease the GST rate on EVs from 12 per cent to 5 per cent.
The Society of Manufacturers of Electric Vehicles Director General Sohinder Gill said that the announcements on EVs in the Union Budget 2019-20 bring cheers to both consumers as well as e-vehicle manufacturers. He added that the decision on incentivizing EV manufacturing by extending benefits under Section 35AD(1) is a move in the right direction to make India an EV manufacturing hub as it will help in the creation of a local manufacturing base and encourage component manufacturers to invest in the sector. Provision of additional income tax deduction of an amount up to Rs 1.5 lakh on purchase of EVs would encourage customers to opt for them.
The Ministry of Heavy Industries & Public Enterprises had recently announced that under Phase-I of the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India (FAME India) scheme, the government supported nearly 2.78 lakh electric and hybrid vehicles with a total demand incentive of approximately Rs 343 crore for their purchase. Besides, 465 buses were also sanctioned for various cities and states.
The first phase of the FAME India scheme, which commenced on April 1, 2015, concluded on March 31, 2019. The second phase of the FAME India scheme, which started on April 1, 2019, has total budgetary support of Rs 10,000 crore over a period of three years.
Ola Co-founder and CEO Bhavish Aggarwal said that lower GST rate, interest subvention for EV loans and the commitment of Rs 10,000 crore towards FAME II are encouraging. This further reinforces Ola’s mission to build electric mobility for India and the world and contribute toward making our nation, the global hub for innovation in this space.
Okinawa Autotech Founder and Managing Director Jeetender Sharma said that Finance Minister’s emphasis on FAME II initiative and pushing EV infrastructure will help in attracting investment for local manufacture of components which will further strengthen Make In India initiative and ensure clean and green energy over time.
The Phase-II of the FAME India scheme will mainly focus on supporting the electrification of public and shared transportation. It aims to support 7,000 electric buses, five lakh electric three-wheelers, 55,000 electric four-wheeler passenger cars and 10 lakh electric two-wheelers through subsidies.
