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Provisions in the Union Budget for 2023 that Will Help the Automobile Industry

This time, renewable energy and lowering the cost of EVs are the main priorities.

With an emphasis on renewable energy, the budget for 2023 has been revealed. The government intends to lower carbon emissions and work on a number of green energy options, which will also result in the creation of numerous jobs. There are just a few significant announcements for the automobile industry:

 

Custom Duty Exemption On Li-Ion Batteries

Customs tariffs exemptions for the import of products and equipment needed to produce lithium ion cells for electric vehicle batteries have been extended, according to Finance Minister Nirmala Sitaraman. By ensuring greater local Li-Ion battery production and manufacture, this will control the cost of EVs. Given that automakers are introducing a large number of electric vehicles to the country, this action was desperately required. They might introduce additional EVs as a result of this.

According to the Finance Minister, imports of equipment and supplies used to make lithium-ion battery packs into India would not be subject to customs taxes. A lithium-ion battery is an all-electric car's most essential component, as we all know. Given that the majority of all-electric vehicles employ parts from countries other than India, this is a significant step toward making them affordable. This will only apply to EVs made in India, though. Expect cheaper two-wheelers and budget all-electric vehicles in India in the future.

 

Increased Production of Ethanol Blends

Denatured ethyl alcohol is free from basic customs charge according to the Budget 2023. Denatured alcohol, which can be used as an alternative fuel, is essentially ethanol with harmful chemicals. The government intends to stimulate and increase ethanol production through the exemption. The center has mandated that starting in April 2023, all vehicles must be ethanol-material compliant, and starting in 2025, they must be flex-fuel ready (ethanol in a 20 percent blend).

The Union Budget has set aside a sizable amount of money to help us all reach net zero emissions. As part of it, the Finance Minister approved an allocation of Rs 19,700 crore for the National Green Hydrogen Mission to manufacture green hydrogen. By 2023, the government hopes to have 5 million metric tonnes of hydrogen available for manufacturing. This will revive hydrogen-powered transportation in India, which is now losing ground to EVs both domestically and abroad.

 

Old central and state government vehicles to be scrapped

Direct purchasers would not be impacted by this decision; instead, it would be advantageous to the automakers. The government has already declared rewards for the car scrappage programme, which is already in effect. In order to reduce automobile pollution, the majority of government cars are now outdated Ambassadors, Gypsys, Qualis, and Boleros that will shortly be discarded in favor of modern models. Even the outdated ambulances will be replaced with newer models that should provide additional functionality.

The federal government will give more money for the policy on car scrapping. The finance minister also said that pronouncements about the scrappage strategy at the state level will come later. The federal government will increase funding for the Vehicle Scrappage Policy, which was initially planned in the 2021–22 budget. In addition, states will receive all the assistance necessary to help them destroy obsolete cars and ambulances.

TopGear Magazine February 2024