Highlights
- Focus on green mobility
- Manufacturing li-ion batteries could get cheaper
- Increase in custom duty rates for a variety of vehicle categories
The Union Budget 2023, presented by Nirmala Sitharaman, Hon’ble Finance Minister offered provisions for the common man, with revisions in tax slabs and putting more focus on Green Mobility and allied infrastructure. But at the same time, the finance minister has proposed a change in the customs duty for few automobile categories as well. Here are few highlights from Union Budget 2023, with focus on the Indian automobile sector.
Green Mobility
In order to promote green fuel, central excise duty exemption is being provided to blended Compressed Natural Gas from the total amount as is equal to the GST paid on Biogas/Compressed Biogas contained in the blended CNG.
Electric Vehicles
In a bid to offer impetus towards green mobility, customs duty exemption is being extended on import of capital goods and machinery required for manufacture of lithium-ion cells for batteries used in electric vehicles. This is likely to be seen as a big win for indigenous EV OEMs, who are already manufacturing battery cells in India. The reduction in cost of manufacturing lithium-ion batteries will directly lead to a reduction in prices of EVs in India.
Increase in Custom Duties
The government has increased the rate of custom duties for ICE and electric vehicles in semi-knocked down form (SKD) from 30 per cent (including 3 per cent social welfare surcharge) to 35 per cent. Similarly, electric vehicle in Completely Built Unit (CBU) form, other than with CIF (customs, freight, insurance) value more than $40,000 will have their customs duty rate increased from 60 per cent (including 3 per cent SWS) to 70 per cent.
Lastly, Vehicle in Completely Built Unit (CBU) form, other than with CIF more than USD 40,000 or with engine capacity more than 3000 cc for petrol-run vehicle and more than 2500 cc for diesel-run vehicles, or with both, will have their customs duty rate increased from 60 per cent (including 3 per cent SWS) to 70 per cent.
Green Hydrogen Mission
The recently launched National Green Hydrogen Mission with an outlay of Rs. 19,700 crores aims to facilitate the transition of the economy to low carbon intensity and reduce dependency on fossil fuel imports, thereby reducing our fuel import bill too.
Finance Minister Nirmala Sitharaman said that ‘green growth’ would be one of the priorities of the budget. “We are implementing many programmes for green growth across various economic sectors…They will help reduce carbon intensity and create green jobs”. The current government looks to focus on green energy and subsidise investment and create job opportunities in the sector.
Vehicle Scrappage
The government has allocated adequate funds to replace all old vehicles of the Central Government and State Ambulances.
Jet Fuel
Jet fuel price was hiked recently by 4 per cent in line with firming international oil prices, however petrol and diesel rates remained on freeze for a record 10th month. Aviation turbine fuel (ATF) price was increased by Rs 4,218 per kilolitre, or 3.9 per cent, to Rs 1,12,356.77 per kilolitre in the national capital, according to a price notification of state-owned fuel retailers. The increase follows three rounds of reduction since November 2022.
PM Awaas Yojna
The finance minister proposed a 64 per cent increase in allocation for PM Awaas Yojana, amounting to Rs. 79,000 crores. It is expected to provide a boost for commercial vehicles and tractors used for moving materials for construction. The significantly higher capex allocation will support the commercial vehicles industry and will be positive for multi-axle vehicles and tippers.
Keyword: Union Budget 2023 Highlights: Focus On Green Mobility, EVs & Common Man