Budget 2022: What mobility industry expects from FM Nirmala Sitharaman

Electric vehicles will see strong adoption in the coming years, with two-wheelers and fleets leading the way. This segment is also seeing action from startups and new entrants, in addition to the established players. The subsidies through Faster Adoption and Manufacturing of Hybrid and EV (FAME II) and other tax relief items will be expected to continue. While the usage of the budget has been slower than expected, significant usage is expected in the coming months, especially on the 2-wheeler (2W) space.

A partial relaxation in the aggressive localisation criteria for incentives may help boost demand. There is a strong need to continue incentivising research and development in e-mobility especially in battery technology innovation. Incentives like accelerated depreciation benefits for investments towards EV charging ecosystem and a higher benefit for such charging systems, utilizing electricity generated through renewable energy, could be considered.

Indirect tax incentives towards leasing of electric vehicles and import of equipment for manufacturing of specialized EVs and PHEVs could be evaluated. The government should focus on skill development in the EV and PHEV sector and make EVs and PHEV related skilling and training programmes a part of the skilling India initiative.

There is a need to focus on building a strong post sales battery supply ecosystem that aids battery swapping. A GST rate reduction for standalone batteries and incentives for inclusion of swapping/subscription options in the FAME-II outlay may help mitigate the consumer anxieties.

Alternative Fuels: There will be expectations from the budget on a comprehensive future of energy policy to help boost the value chain and applications of alternative fuels for specific use cases in mobility

Smart Cities: A dedicated expert team to look into the issues plaguing current smart city implementation and to work towards accelerating the pace of smart city projects will be important.

Connected and Autonomous Vehicles: With the increasing usage and relevance of connected car technology in modern-day vehicles, there is a need for a comprehensive policy around testing, metrics of evaluation, and eventual deployment of such technology.

Shared Mobility: While this segment (especially ride-sharing) helps considerably in reducing congestion through an increase in per capita usage of the vehicle, it has seen a significant drop in demand during and post the pandemic. With the long term in mind, it is important to consider incentives to increase occupancy in vehicles and the budget may want to start addressing the needs of this segment

Scrappage and End-of-life: While the proposed scrappage policy 2021 looks promising, there need to be additional budgetary considerations around building the reverse infrastructure for scrappage, failing which it may not get off to a strong start.