Finance Minister Nirmala Sitharaman presented the Union budget for the year 2022-23 earlier this week and like every year, there were a few proposals that caught the attention of the Indian Auto Sector. There was a clear focus on the rapidly growing electric vehicle segment in the country with the proposed formulation of a battery swapping policy for EV charging stations. The Government has recognized battery or energy as a service and has said efforts would be made to increase the use of EVs in public transportation.

Battery swap.Bounce Electric Scooter.

The Electric vehicle Industry has reacted positively the announcement which is expected to fasten the adaptability of electric vehicles across the country. Sohinder Gill, Director General, Society of Manufacturers of Electric Vehicles (SMEV), said, “The budget for 2022–23 gives a huge impetus to the electric vehicle (EV) industry. It would motivate businesses engaged in delivery and car aggregation businesses to incorporate EVs into their fleet. It will create new avenues for companies to venture into the business of battery swapping. Additionally, creating special clean zones will further accelerate the adoption of EVs and spread awareness amongst the citizens.”

Naveen Munjal, MD of Hero Electric, India’s biggest EV maker said, “We welcome the move by Hon’ble Finance Minister for announcing the commencement of battery swapping and battery standardization process. This move will open up avenues for further growth and development of the EV and energy sector in the country. Interoperability standards will help address range anxiety issues and battery swapping stations will be an asset to the evolving EV ecosystem across the country. Overall, we believe that we are steering forward in our commitment to create an emission free country.”

Suhas Rajkumar, CEO & Founder, Simple Energy, said, “It is heartening to see that the government is looking at transitioning to EVs at a faster pace. Although battery as a service can be implemented for certain areas only, encouraging the private sector to create sustainable business models is a welcome move. Impetus should be given on developing safer battery packs as swapping stations cannot be applied to direct consumers given the safety aspect as this will further lead to making the ownership of the vehicle complex.”

The Government also revealed in the budget its plans for developing 25,000 kilometers of new highways in the next financial year. This will result in a push for infrastructure spending and in turn ensure an increase in Commercial Vehicle sales in the country. Apart from this, the Finance Minister also announced that to promote the use of environment friendly blended fuels in the country, non-blended fuels will attract an additional excise duty of Rs. 2/litre starting from October 2022. This will also help in reducing the Petroleum imports into the country.

Reacting to the big announcements, Kenichi Ayukawa, President, Society of Indian Automobile Manufacturers (SIAM) said “SIAM welcomes a growth-oriented budget focused on Building Long Term Strength using Investment as the growth lever while maintaining policy stability and inclusivity. The 35% increased Capex outlay, major infrastructure projects like 25,000 km road construction, 100 Cargo terminals, Project GatiShakti, 5G network, optic fibre cable laying and the recent PLI schemes are major positives. Leveraging Biomass and support to ethanol blending for both environment and economy gains could unlock the power of India’s rural economy.”

Federation of Automotive Dealers Association (FADA) also welcomed the moves announced in the budget. Vinkesh Gulati, President FADA, said, “The Budget has attempted to focus on each of the sectors and has also tried to stimulate the economy after the pandemic slowdown. FADA welcomes and supports the Government’s efforts & initiatives towards Electric Mobility. There is a clear emphasis on creative, sustainable & innovative business models. Battery Swapping & Energy as a Service (EAAS) will surely help accelerate the transition towards Clean Mobility. The development of special mobility zones for electric vehicles and promoting clean technology for public transport validate government commitment to E-mobility, which would boost confidence in the EV industry in terms of manufacturing, sales, and create a sense of assurance among customers.”

Government’s plans on 2.3 lakh crore direct payment as MSP to farmers also got a thumbs up from Auto dealers who believe it will work as a booster for 2Wheeler, Tractor & entry level PV sector sales. Rural India has generally been the key driver for entry level passenger vehicle segment & 2wheeler space.However, the umbrella body of Auto dealers across the country was sceptical of the move to levy an additional duty of Rs. 2/litre on unblended fuel saying it could play a spoilsport for the already stressed 2W industry.

The writer is Senior Editor at carandbike.com