NEW DELHI: The Union Budget 209-20 presented by Finance Minister Nirmala Sitharaman on Friday envisaged a vision to make India a global hub for manufacturing electric vehicles.
During her maiden budget speech, the FM also outlined various proposals for giving a boost to manufacturing of electric vehicles in India and announced tax rebate for buying electric vehicles.
In her budget speech, FM Sitharaman said that under Phase-II of the FAME Scheme, only advanced battery and registered e-vehicles will be incentivised, with greater emphasis on providing affordable and environment friendly public transportation options for the common man.
The main objective of the scheme is to encourage faster adoption of electric vehicles through upfront incentive on purchase of such vehicles and also by establishing the necessary charging infrastructure for the same.
Phase II of FAME has an outlay of Rs10,000 crore for a period of 3 years, and has commenced from 1st April, 2019.
FM Sitharaman added that the inclusion of solar storage batteries and charging infrastructure in the FAME scheme will give a boost to manufacturing, which is needed for India to leapfrog and become a global hub for manufacturing of these vehicles.
The Finance Minister also said that the government has already moved to the GST council to lower the GST rate on electric vehicles from 12% to 5%.
In order to make electric vehicles affordable to the consumers, the Union Budget 2019 states that the government will provide additional income tax deduction of Rs 1.5 lakh on the interest paid on loans taken to purchase electric vehicles.
This amounts to a benefit of around Rs 2.5 lakh over the loan period to the taxpayers who take loans to purchase an electric vehicle.
To further incentivise e-mobility, customs duty is being exempted on certain parts of electric vehicles, the FM said.
The reduction in GST rates on electric vehicles(EV) from 12 per cent to 5 per cent will also motivate manufacturers of EVs and electronic vehicle loans will boost sales, some experts claimed.