Interim Budget 2024-25: Cleantech Sector Cheers Announcements, EV Players Seek Details

In line with India’s pledge to cut emissions to net zero by 2070, finance minister Nirmala Sitharaman made a number of announcements for the cleantech sector in her speech for interim Budget 2024-25.

While the electric vehicle (EV) sector, a part of the larger cleantech segment, also found a mention in FM Sitharaman’s speech, she didn’t provide details on the plans.

On the cleantech front, Sitharaman said the government will provide viability gap funding for harnessing offshore wind energy potential for an initial capacity of 1 GWh. Besides, coal gasification and liquefaction capacity of 100 metric tonnes will also be set up by 2030, the minister said.

The Centre will also launch a new scheme for biomanufacturing and bio-foundry to provide environmentally friendly alternatives such as biodegradable polymers, bioplastics, biopharmaceuticals and bio agri inputs. 

“This scheme will also help in transforming today’s consumptive manufacturing paradigm to the one based on regenerative principles,” said Sitharaman during her budget speech.

Following the announcements, Abhilash Sethi, investment director at agriculture-focussed VC fund Omnivore, said, “Financial assistance for the procurement and aggregation of biomass was something that we were expecting and is a welcome move to support many new-age companies working in the circular economy sector.” 

“We will also be eagerly waiting for the new scheme on bio-manufacturing, and the mention of it was highly comforting,” Sethi added.

Besides, the Centre also announced rooftop solar installations in 1 Cr households for providing up to 300 units of free electricity every month, along with the launch of a scheme for restoration and adaptation measures, and coastal aquaculture and mariculture in an attempt to promote climate resilient activities.

Mayuresh Raut, cofounder and managing partner at Seafund, said that the solar rooftop schemes will be a big boost for India to address the EV charging infrastructure that is currently holding back wider adoption of EVs. 

“It will also create enormous jobs for installation, manufacturing and maintenance of solar infrastructure and a secondary effect will be opportunities available for startups to build on this,” he said.

CleanMax, Freyr Energy, and Loom Solar are a few startups working to strengthen the solar industry in the country.

While cleantech saw a significant push from the government, the EV sector was not completely satisfied as the industry’s long-pending demands of GST standardisation and more comprehensive subsidies for allied sectors remained unaddressed.

Commenting on the matter, Varun Goenka, cofounder and CEO of Chargeup, said, “While we appreciate the commitment to fortify the EV sector, we emphasise the importance of addressing certain aspects left untouched. The introduction of a bio-manufacturing scheme resonates with our environmentally conscious approach; however, we advocate for a more comprehensive approach beyond subsidies for electric two- and three-wheelers.”

“The government’s emphasis on green energy, encompassing shore-wind energy and coal gasification, mirrors our dedication to cleaner technologies. Nevertheless, we urge a closer examination of challenges such as high GST rates and the lack of affordable financing for critical EV infrastructure, including Battery-as-a-Service facilities and charging stations,”  Goenka said.

So, What Does The EV Industry Get?

The finance minister said that the government will strengthen the EV ecosystem by supporting manufacturing and charging infrastructure

“Greater adoption of ebuses for public transport networks will be encouraged through payment security mechanism,” she added, without giving any further details.

Meanwhile, the government reduced its budgetary allocation for the EV demand incentive scheme FAME by a little over 44% to INR 2,671.33 Cr for FY25.

Though it was an interim budget before the general elections and major announcements were not expected, the industry was looking forward to some clarification on the FAME-II extension or the introduction of FAME-III. However, the matter did not find any explicit mention during the Budget.

Chargeup’s Goenka said, “Despite our hopes for FAME-III subsidies extending coverage to EV buyers opting for vehicles without batteries, this aspect was not addressed. We eagerly anticipate a more holistic strategy that considers the diverse needs of the entire EV ecosystem.”

Echoing a similar sentiment, Sohinder Gill, CEO of Hero Electric, said, “We appreciate that the Budget reinforces commitment towards sustainability and emphasises a green public transportation system, prioritising a strong charging infrastructure for widespread adoption of electric vehicles. However, a noticeable gap in the Budget is the absence of sustained and continued direct customer subsidies.”

Gill noted that subsidies have played a substantial role in driving the adoption of EVs across various categories over the last two years.

“We eagerly await the government’s comprehensive strategy and commitment to sustaining the electric vehicle manufacturing ecosystem. It is anticipated that a combination of fiscal and non-fiscal interventions will be outlined, offering crucial support for the industry in the coming years until it achieves a threshold for self-sustained growth,” he added.

However, some industry leaders expressed their support to the Centre’s efforts and said the implementation of the measures announced in the Budget would have a positive impact on the EV ecosystem.

Appreciating the government’s steps, Sandiip Bhammer, founder and co-managing partner at Green Frontier Capital, said that the Centre might take multiple steps to strengthen the EV ecosystem, such as through policy framework and incentives, electrification of public transportation, by investing or creating incentives for investment in charging infrastructure, and more.

Ankur Bansal, cofounder and director at BlackSoil, said, “…introducing a payment security mechanism in public transport networks will encourage greater adoption of ebuses. This strategic initiative will drive economic growth and help us popularise sustainable transportation in the country.”