With the Centre announcing major initiatives to incentivise electric vehicles in the Union Budget, the onus is on the auto industry to achieve the targets, according to Pawan Goenka, Managing Director, Mahindra and Mahindra. “The government has done what they could do. Now, the onus is on the industry and service providers to make the EV dream happen,” said Goenka, while speaking to media on Friday.
Taking into consideration the Faster Adoption and Manufacturing of Electric Vehicles (FAME II) scheme, and the Budget announcements concerning the IT benefits, incentives for the local manufacturing of inputs to EVs, and the benefits to the charging infrastructure, Goenka said that “as an industry, you can’t ask for more”. Goenka said that it remains unclear if the income tax deduction of ₹1.5 lakh on the interest paid on loans to purchase electric vehicles (EV), announced in the Budget would benefit only personal buyers, or be applicable to fleet buyers as well.
The government has proposed the mandating of electric three-wheelers and two-wheelers by 2023 and 2025, respectively. Meanwhile, the transition to BS-VI norms, set to come into play on April 1, 2020, will make three-wheelers more expensive, which is expected to work in the favour of electric three-wheelers. Responding to a query on whether it would be more viable to bring out only electric three-wheelers due to these factors, Goenka said, “There’s no doubt the regular three-wheeler will become more expensive. Hence, there will be a better justification for electric three-wheelers. But the industry has invested a lot of money in BS-6 for three-wheelers and I don’t think it would be fair to say that overnight, all the investment that is being made in BS-6 should be set aside.”
Budget proposals related to banking and NBFC sector will improve availability of funds to retail customers but more should be done to improve consumer demand in the auto sector, according to Goenka. “If there are 10 per cent who where not getting financing today but start getting financing tomorrow, suddenly the growth is 10 per cent. But I believe that something more is required. A stimuli to the total demand is required right now. The only thing that it could come from, in the short term, is by GST rate reduction for a fixed period. The only place where I would ask for a permanent GST correction is post BS-6. When the prices go up on April 1, 2020, because of BS-6, there needs to be some compensation….” Goenka said.