Budget 2019: Its effects on conventional, hybrid and electric vehicles in India

Finance Minister Nirmala Sitharaman announced in the union budget 2019 an effort to implement small changes to get big results. The automobile industry specifically, was hoping for some supportive measures from the government during the slow-down of the sales in the country. However, they have not got anything that could help the industry immediately. The though budget did include some generous announcements for the electric vehicles. In fact, even so many unknown electric vehicle manufacturers dropped us emails lauding the effort. Here’s a glance at what all changes were proposed for our auto industry

Petrol, diesel to get costlier

The FM announced a raise of special additional excise duty and road cess on petrol and diesel by Rs 1 per litre. This translated to a near Rs 2-3 hike in the current petrol/diesel prices. The budget also favours a faster and wider expansion of road infrastructure to be built all-over the country. In fact, 83,000 crore has already been sanctioned to expand the highway grid.

Cut in the GST rate on electric vehicles

Sitharaman has also proposed that the GST council cut the GST rates on the electric vehicles from 12 per cent to five per cent. It this gets implemented, the prices of the electric cars will get a significant amount of reduction in coming times. The FAME II scheme adoption means more than 10,000 crore worth of incentives will be rolled out for e-vehicles. Sitharaman also announced that certain EV components will be tax free.

Income tax reduction on EV loans

The Finance Minister has announced an income tax reduction of Rs 1.5 lakh on the interest paid on the loans taken to buy any electric vehicle. This will encourage more and more middle class people to opt for the electric vehicles, thereby boosting sales as well as lowering down the cost.

Nothing for hybrid cars

There are no separate benefits announced for the hybrid vehicles. It shows that the government doesn’t want to go the long route of switching to hybrid from ICE and then going to EVs. Instead, it is pushing the direct shift from IC engine cars to pure electric vehicles. The same way, the BS-IV to BS-VI implementation is being done. Not only this, certain spare parts components of luxury ICE cars will bear an additional tax. The auto industry seems to be a little disappointed with that. Rajan Wadhera, President, SIAM released a statement that states, “The auto industry is currently going through a very difficult time and the industry was expecting some form of a stimulus package in the Budget in line with what had been done by Government during the previous two similar slowdowns. It is disappointing that the FM has not recognised the distress in the auto sector and not come out with any kind of support or stimulus.”


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