- 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
- The finance minister announced a customs duty exemption on lithium-ion cells, which will help lower the cost of lithium-ion batteries in India
With a host of incentives unveiled in the Union budget for electric vehicles, India has started following the footsteps taken by the governments in China and Europe. India will now be following the steps undertaken by these two countries for the development of the nascent EV industry by offering extensive fiscal incentives and a favourable regulatory environment.
Pushing ahead with its goal to have more electric vehicles to curb rampant pollution afflicting major cities and trim costly oil imports, the government has started from 1 April 2019, the second phase of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME 2) scheme, with an outlay of ₹10,000 crore.
Although this sum may not be significant compared to some developed countries, the incentives announced in the budget for this sector will go a long way in restoring the confidence of investors and customers alike, reports Mint.
Budget brings a sigh of relief
Finance minister Nirmala Sitharaman announced 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.
The minister also announced a 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. Makers of components such as solar electric charging infrastructure and lithium storage batteries and other components will be offered investment linked income tax exemptions under Section 35 AD of the Income Tax Act, and other indirect tax benefits.
Most of these steps are similar to the one taken by the governments in China and Europe.
India, though, like China or countries in the European Union (EU), has not set a target for automakers to convert a certain part of their total vehicle production to electric or other electrified offerings. The NITI-Aayog is considering a policy proposal to ban all internal combustion engine two-wheelers under 150cc by 2025 and three-wheelers by 2023.
