As the Centre announced the extension of the EMPS (Electric Mobility Promotion Scheme) up till September this year, electric vehicle companies and industry experts are of the view that a long-term policy for increasing the adoption of EVs is indispensable.
In its first Budget after the election, the government slashed the subsidy on electric vehicles under FAME II to 15 per cent from the earlier 40 per cent.
The impact could raise electric vehicle prices and affect rapid adoption of electric two-wheelers.
Pritesh Mahajan, Co-Founder of Revamp Moto, said extension of the EMPS offers both challenges and opportunities for sectoral players.
‘An opportunity’
“We perceive it as a moment to innovate and adapt to the changing regulatory dynamics. The financial incentives associated with two-wheeler EV subsidies are subject to periodic changes. Irrespective of this, we remain dedicated to offering sustainable and affordable electric mobility solutions to the Indian market.
“Revamp Moto will undertake initiatives to optimise cost and improve the general efficiency of our offerings through enhanced R&D, strategic collaborations, prioritising local manufacturing, and introducing more customer-oriented financing solutions.
“We believe the extension of the EMPS 2024 is a positive step towards bridging the gap left by the FAME subsidy and promoting electric mobility in India.
This new plan will help us to accelerate our market penetration, and drive productive collaboration with charging infrastructure companies to generate more jobs and contribute to the country’s overall economy,” said Mahajan.
Kunal Arya, Founder and Managing Director of ZELIO Ebike said, “While the Budget sets a positive foundation for growth, it falls short of increasing funding for EV charging infrastructure, which is crucial for building consumer confidence and accelerating EV adoption. Additionally, reducing GST on EV components and batteries would have been beneficial in lowering costs and making electric vehicles more accessible. Simplified financing options and enhanced support for R&D in EV technology would also have bolstered innovation and strengthened global competitiveness.”
GST on EVs
The GST on electric vehicles was reduced to 5 per cent from 12 per cent, which increased adoption. However, analysts stated that once relaxation is withdrawn the impact on the industry will be colossal.
Hemal Thakkar, Senior Practice Leader and Director, Consulting, CRISIL Market Intelligence & Analytics, said: “In the case of electric two-wheelers, the biggest challenge will be long-term policy stability.
“The acquisition delta is very high for EVs while customers are aware that the subsidy is ongoing.
“What will be crucial is the timeframe for 5 per cent GST. Once the GST relaxation goes away, there will be price corrections though it will continue to be operationally cheaper than ICE; but acquisition cost delta would mean that financiers will have to find confidence and in the current scheme of things, financing is one area that needs to be addressed. Also, there was no mention of FAME III in the Budget, which is the reason for the extension of EMPS, while the government decides on the framework of FAME.”
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