What’s In The Interim Budget For Automobile & Technology Sectors?

The government wants to push electric mobility and give a boost to artificial intelligence with its proposals.

The Interim Finance Minister Piyush Goyal, while presenting the Interim Union Budget 2019, didn’t go into much detail on proposals for the technology and automotive sectors. However, he did reiterate India’s push to electric mobility and also the setting up of a National Centre of Artificial Intelligence.

India will lead the energy revolution in the world with electric vehicles. This India will travel in electric vehicles. We will not import oil and we will produce electricity on our own within the country. 

Piyush Goyal, Interim Finance Minister

Goyal did not elaborate on the steps that would be taken specifically to incentivise electric vehicle production or the setting up of charging infrastructure for the same. Details on that will be expected in the full budget in June.

Push For Electric Mobility

However, just a couple of days before the Interim Budget, the government cut customs duty on import of parts and components for electric vehicles to 10 to 15 percent from 15 to 30 percent earlier.

The Central Board of Indirect Taxes and Customs (CBIC) removed customs duty exemption to battery packs for electric vehicles and also doubled the duty on battery packs for mobile phones.

Henceforth, import of battery packs for electric vehicles will attract 5 percent tax from zero duty earlier. Customs duty on battery packs for mobile phone has been doubled to 20 percent. This is seen as a move to promote local manufacture of batteries under the ‘Make in India’ initiative of the government.

However, reactions from the industry are mixed.

Although the government underlined their view on FAME2 again to encourage Electric Vehicles (EVs) yet a clear date and target are missing. Somehow, the decision of increasing 5 percent duty on batteries will create an obstacle in wide adoption of EVs, but we hope that government will revise the policy framework to attain the target of 30 percent to 40 percent EVs on a conservative scale.

Dhivik Ashok, CEO Go GreenEoT 

We applaud the government’s focus on EV drive towards reducing fuel import. The vehicle emission based tax regime would boost this EV vision, towards achieving a cleaner and greener environment.

Shekar Viswanathan, Vice Chairman & Whole-time Director – Toyota Kirloskar Motor

Considering the environment concerns we were hoping for something concrete in the 2019 budget. Moreover to meet the target of 2030 the government needs to plan today instead of giving electric vehicles a push at a later stage. 

Ayush Lohia, CEO, Lohia Auto Industries

We have targets for major Electric Vehicles deployment in India by 2025, our current power generation is just not sufficient to support the same, moreover battery imports in this sector will drain our foreign exchange reserves in a big way.

Akshay Singhal, Founder, Log 9 Materials

Boost for Artificial Intelligence

The government plans to set up a national portal to promote the development of artificial intelligence programmes.

A national programme on AI has been envisaged by the government. This should be catalysed by the national centre for artificial intelligence as a hub, along with other centres of excellence. Nine priority areas have been identified.

Piyush Goyal, Interim Finance Minister

This announcement is expected to give startups working in the area of Artificial Intelligence a boost. Some global giants like Foxconn have already expressed interest in setting up AI development centres in India.

Industry sees this as a welcome move.

The government has been banking on digital technologies such as AI, machine learning, big data and more. We are glad to find out the government’s plans of developing a National Artificial Intelligence portal. 

Atul Rai, CEO and Co-Founder, Staqu 

With the announcement of National Artificial Intelligence portal, we expect India to be propelled on the path of leveraging advanced and disruptive technologies for economic prosperity and growth.

Aakrit Vaish, CEO and Co-founder, Haptik

Going Digital

Besides these two announcements, the government also said that the consumption of data has gone up more than 50 times in the past few years, largely because India has the lowest call and data rates in the world.

The government also announced plans to create 1 lakh “digital villages” over the next five years. No details on how these plans will unfold or what these digital villages consist are available at the moment.