KEY HIGHLIGHTS
- Rs. 3,500 crore allocated for production-linked incentive scheme.
- Reduced allocation of Rs. 2,671 crore for FAME subsidy.
- Import duty exemption on crucial minerals for EV manufacturing.
- Rs. 500 crore allocated to Electric Mobility Promotion Scheme.
- Complete exemption of custom duty on lithium for EVs.
Budget 2024: The automobile industry was expecting some major changes from the government to boost the sector's growth. Some industry-renowned personalities were seen demanding major announcements in the budget for 2024, especially for the EV sector. Now that Sitharaman has finally presented the annual budget, we have all the information with us about all the updates and new announcements.
Were the expectations of the Automobile Industry met or this budget has nothing to serve the sector? If you are interested to know the answer to this question, this article is for you. Here, we will list 7 major announcements that will prove beneficial for the overall growth of the automobile industry. Before moving ahead, join our 91Wheels WhatsApp Community to stay updated on the latest automotive news.
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1. Rs. 3,500 crore for the PLI Scheme
The finance minister Nirmala Sitharaman announced an allocation of Rs 3500 crore for the production-linked incentive scheme for automobiles and crucial components used to manufacture them. This allocation will incentivize the automobile industry to set up production facilities for the same. It will result in higher production which will eventually lead to faster growth of the sector.
2. 2,671 Crore for FAME
However, there is no official announcement regarding the FAME-III scheme (Faster Adoption and Manufacturing of Electric Vehicles in India this time. According to budget estimates, the government has allocated around Rs. 2671.33 crore for FAME subsidy. Notably, the outlay for FAME this time is significantly lower than the previous allocation of Rs. 5,171 crore
3. Import Duty Exempted on Crucial Minerals
Thirdly, the government has exempted import duty on crucial minerals used to manufacture electric vehicles. These minerals include lithium-ion, cobalt, copper and others. This announcement can give a boost to domestic manufacturing of lithium-ion batteries in India as lithium and cobalt are two key components required to manufacture Li-ion batteries.
4. 500 Cr allocation for EMPS 2024
The government has allocated around 500 crore to the EMPS Scheme (Electric Mobility Promotion Scheme). The EMPS 2024 was announced in April 2024 and its objective is to promote electric vehicle adoption in the country by incentivizing EV buyers. The EMPS 2024 subsidizes various types of electric vehicles such as EV two-wheelers, E-rikshaws and EV three-wheelers.
5. No Custom Duty on Lithium
The budget 2024-25 completely exempts the custom duty on lithium which is the main component for manufacturing Li-ion batteries. This announcement will help electric vehicle manufacturers reduce their manufacturing costs which will reduce the high upfront cost of the electric vehicles.
6. Focus on Skilled Workforce
Lastly, the government gave special mention to the need for a focused skilled workforce in the automobile industry. The budget 2024-25 includes job creation in the manufacturing sector, employing around 30 lakh youth. Additionally, the government will also launch training programmes that will create a skilled workforce in the sector, resulting in the growth of the automobile industry.
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Verdict
The budget 2024-25 demonstrates a mixed bag for the automobile industry, with notable support for EVs through PLI and EMPS schemes, and exemptions on crucial minerals like lithium. However, the reduced allocation for FAME and the emphasis on skilled workforce development signal areas where more robust support could foster greater sectoral growth.
