Vikas Gupta, Founder & CEO of Ghaziabad-based EV company e-Ashwa Automotive which sells electric 2-wheelers & 3-wheelers with 700+ retail networks across the country sharing his expectation from the Union Budget 2022-23 said
EV Segment has been struggling on 2 Fronts:
- Inverted Tax Structure: Input tax is at much higher rate (typically 28%) and output tax is at much lower rate(5%), a huge amount is stuck in the claim of GST Refund which is nearly 20% of your 3 Months revenue so in nut shell nearly 60% of your monthly revenue is stuck in the form of GST refund and hence this industry keeps struggling for the cash flow shortage.
- e-Ashwa expects that since Govt has created e-Amrit portal specifically for EV entities so any entity registered on e-Amrit would get subsidised input duty purchases on the items which has higher duty rates for a non e-Amrit registered entity
- No incentive on Manufacture in India: FAME 2 incentive is available but not on manufacturer and on selling that too manufacturer has to claim it only once the vehicle is sold to the end user. In between there are three layers, C&F, Distributor and Dealers. Again the money get stuck for 2-3 months and hence the cash flow challenge prevails here as well.
- The reason why Govt wanted the benefits to be claimed post it is sold to end customer is probably due to the fear that manufacturer may not pass this benefit in pricing and use this subsidy as margin but even today there is no check on the original price of the vehicle before subsidy and hence true benefit is not getting passed on. If Govt can put a cap on the original price and give the benefit to manufacturer, it may help both manufacturer as well as end customer