Budget 2023: Why Nirmala Sitharaman's proposals are growth enablers for EV and shared mobility industry

In India, the adoption of electric vehicles (EVs) has reached a turning point. With the burdens of oil imports and rising price inflation due to the ongoing Russia-Ukraine war last year, the automotive industry is transitioning towards e-mobility. There has been a significant shift towards alternative and less energy-intensive options. The market for electric vehicles is gradually growing. It is anticipated to increase from $3.21 billion in 2022 to $113.99 billion in 2029.

Over the last few years, the government has played a crucial role in driving the adoption of electric vehicles by initiating policies to promote sustainability and creating an ecosystem that supports this growth. The Union Budget 2023 presented by the finance minister is in line with this ongoing growth momentum. Let’s look at some of the major initiatives that favour the sector:

Introduction of new income tax slabs

The new tax regime is one of the significant announcements made by the finance minister during the Union Budget this year. While the basic exemption limit has been increased to Rs 3 lakh, the income tax rebate limit for salaried and individual taxpayers has been hiked from Rs 5 lakh to Rs 7 lakh. The spending capacity of salaried individuals will increase. This might lead to them expanding investing options, including opting for car subscription models or electric vehicles, contributing to the renewable energy sector.

Announcement for clean energy storage and transmission

The declaration of the Green Credit program in the Budget will bolster India’s ‘Green Growth’ initiative. The proposition of building an interstate transmission line for evacuation and grid integration of 13 GW of renewable energy from Ladakh with an investment of Rs 20,700 crore, including Rs 8,300 crore from the central government, is a favourable move. This sustained focus on green mobility and energy infrastructure projects will propel automobile demand.

Simultaneously, if the Green Credit Program assists with financing in the EV sector, there will be a significant increase in access to electric vehicles for various mobility solutions. The proposal for an energy transition budget of Rs 35000 crore and the rise in the Capex budget by 33 percent are both positive initiatives for the mobility sector, opening up more room for innovation and growth.

While India witnessed a gradual slowdown in the past year, the country is on the right growth trajectory. This year’s Union Budget proposals are indeed positive and growth-focused. The automotive ecosystem in India will benefit greatly from this Budget, especially the EV sector, due to green energy-related provisions. The growth in the automobile sector will positively impact the economy’s overall projected growth of 7 percebt in 2023.

The writer is Founder, Myles Cars-self-drive car sharing company. She tweets @sakshivij @MylesCars. Views expressed are personal.

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