The Union Budget 2023 presented by Union Finance Minister Nirmala Sitharaman announced several green growth-focused measures for the auto industry, with an aim on reducing the carbon intensity of the economy and meeting clean energy targets.
India's domestic electric vehicle (EV) market will grow at a compound annual growth rate (CAGR) of 49% between 2022 and 2030 and will see one crore units in annual sales by 2030, the Economic Survey had noted. As per the government of India’s Vahan portal, 999,949 EVs were sold in 2022.
For achieving these targets, here’s all that the Finance Minister announced during Budget 2023:
Extension of subsidies on EV batteries:
FM Sitharaman announced reducing customs duty on capital goods/machinery for the manufacture of lithium-ion batteries used in the EV to help in reducing the cost of EVs in India. In addition to these, the minister also announced that the subsidies on EV batteries will be further extended for one more year.
Green Hydrogen Mission: Sitharaman reiterated that the recently launched National Green Hydrogen Mission, with an outlay of Rs 19,700 crore, will help facilitate the transition of the economy to low carbon intensity, reduce dependence on fossil fuel imports and make the country assume technology and market leadership in this sunrise sector. She said, “Our target is to reach an annual production of 5 MMT (of green hydrogen production) by 2030."
Changes in Customs duty: The minister announced that importing vehicles in the country will see a hike in Customs duty starting February 2, 2023. All vehicles, including electric vehicles (EVs), which would be imported in either a Semi-Knocked Down (SKD) form or a Completely Built Unit (CBU) form will see up to a 10% increase in taxes.
She also dropped Customs duty to nil for vehicles, specific automobile parts and components, sub-systems and tyres when imported by notified testing agencies, for testing and certification.
Vehicle Scrapping Policy: As we all know that replacing old polluting vehicles is an important part of moving towards a greener economy. While furthering the vehicle scrapping policy announced in the previous budget, the finance minister said that states will also be supported in replacing old vehicles and ambulances.
Increase in personal income tax limit: The finance minister announced an increase in the tax rebate limit on personal income. “Currently, those with income up to Rs 5 lakh do not pay any income tax in both old and new tax regimes. I propose to increase the rebate limit to Rs 7 lakh in the new tax regime. Thus, persons in the new tax regime, with income up to Rs 7 lakh will not have to pay any tax," Sitharaman said.
This increase in rebate is likely to create more disposable income with the salaried persons to spend on personal vehicles.
(Edited by : Pradeep John)
First Published: Feb 1, 2023 8:39 PM IST
