India’s newly appointed finance minister, Nirmala Sitharaman, has unveiled the country’s full-year budget that discussed support for lithium battery and electric vehicle (EV) manufacturing, as well as a focus on solar charging infrastructure for EVs.
The budget runs up to 31 March 2020, following prime minister Narendra Modi’s recent thumping victory in the world’s largest democratic election.
In ‘Mega Investment in Sunrise and Advanced Technology Areas’, the government plans to invite international companies to set up huge manufacturing plants, via competitive bidding processes, in promising sectors such as solar PV cells, lithium storage batteries, and Solar EV charging infrastructure, among others. Sitharaman promised such firms investment linked income tax exemptions and other indirect tax benefits.
Sitharaman’s Budget sought to “leapfrog” India into a global hub of EV manufacturing, which would boost solar-plus-storage and charging infrastructure sectors in tandem. The Goods and Service Tax (GST) has already been lowered from 12% to 5% for EVs, while the government will provide additional income tax deduction of INR150,000 (US$2,185) on the interest paid on loans taken to purchase EVs.
Dr Rahul Walawalkar, president, India Energy Storage Alliance (IESA), welcomed the GST and income tax reductions, claiming that they would speed up the EV revolution. He also praised exemption from custom duties for EV components such as e-drives and onboard chargers.
Walawalkar also enjoyed the support for mega factories for lithium-ion and solar chargers in India:
“This is a very important step to ensure energy security for India to avoid over-reliance on imports of key components of EVs. We expect that setting up of these gigafactories will also help us in expanding the market for stationary energy storage projects for supporting renewable integration and reducing the usage of diesel for backup power generation.
“At the same time, IESA urges the government to expand the incentives to other advanced energy storage technologies including thermal storage, flow batteries, metal-air batteries, fuel cells, supercapacitors and mechanical storage technologies such as gravity storage.”
Walawalkar also welcomed a reduction in customs duties from 5% to 2.5% on Cobalt mattes, a critical ingredient for advanced lithium-ion batteries. However, he also urged for a greater commitment to e-waste management and recycling of lithium-ion batteries.
Sitharaman also said the government would try to replicate its success at rolling LED lightbulbs across the country with a similar focus on promoting the use of solar stoves and battery chargers in the country.
This will create a huge demand for advanced batteries and support the push for gigafactories in India, said Walawalkar.
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