Budget 2024: Last mile mobility firms propose GST reduction on EV services

Mobility services in India have been a game-changer for the logistics industry over the past few years. With the country’s aim to achieve 100% electrification in the two-wheeler and three-wheeler segments, legacy players and EV start-ups are actively working towards solutions to foster this transition. Ahead of the interim budget, the country’s last-mile players expect a slew of measures that could further enhance the mobility services in India.

Suman Mishra, MD & CEO, Mahindra Last Mile Mobility Limited, expects the interim budget to drive inclusive income generation in order to bolster upliftment for EV fleet drivers. "By driving inclusive income generation, electric three-wheelers and commercial vehicles pave the way for financial upliftment of many. Their clean operation also safeguards our urban health by reducing noise and air pollution," says Mishra.

Echoing similar thoughts, Maxson Lewis, MD & CEO, Magenta Mobility, anticipates a stable policy framework including incentives for replacing polluting vehicles with more sustainable alternatives to find space in the interim budget. “We urge for a clear, stable policy framework, including a program incentivising the replacement of polluting vehicles with electric alternatives, accelerating sustainable transportation adoption and providing a predictable environment for long-term planning and investment in fleets. With these measures, we can work with the government to curb carbon emissions and ignite robust economic growth, powered by safe, smart and sustainable logistics solutions,” says Lewis. 

Meanwhile, Akash Gupta, co-founder and CEO, Zypp Electric, expects inclusion of last-mile services as a distinct sector under logistics policies in the interim budget. “Addressing the last-mile delivery gap is equally critical. Recognising last-mile delivery as a distinct sector under logistics policies is essential, given that one-third of shipments fall within this category. Establishing industry standards, supporting gig delivery partners with tailored schemes, and implementing standard operating procedures (SOPs) will enhance efficiency and foster growth in this vital but often overlooked segment of the logistics industry,” says Gupta.

Incentive Support

While the EV industry has actively voiced for additional FAME (Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles) support in the interim budget, mobility services are also expecting the same.

“Prioritizing the electric vehicle (EV) sector is crucial for a sustainable future. First, inclusion in the priority lending scheme will fuel growth by facilitating easier access to capital. To accelerate the adoption of EV-led delivery services, a reduction in GST for EV services from 18% to 5% is imperative. While EV purchases enjoy a 5% GST rate compared to 28% for internal combustion engine (ICE) vehicles, a similar distinction must extend to services. Furthermore, introducing usage-based incentives for EV drivers, in addition to existing FAME buyer incentives, will be a game-changer. Rewarding users based on carbon savings and kilometres driven creates a tangible incentive for sustainable choices,” says Zypp Electric’s Gupta.

Magenta Mobility’s Lewis expects incentive support for fleet operators to make commercial EVs accessible and cost-effective. Lewis also anticipates amped-up R&D funding for manufacturing lighter batteries so that operating costs can be lowered while extending the range and performance of electric vehicles.

Meanwhile, Anmol Singh Jaggi, CEO, BluSmart anticipates the forthcoming budget will take into account the country’s economic growth coupled with sustainability.  “The FAME policies have played a large role in boosting the EV sector and thereby enabling cleaner mobility solutions. Firstly, charging infrastructure is a critical enabler and while there is an 18% GST levied on EV charging, electricity supply is exempt, rationalising the tax structure will help accelerate the vision of promoting electric mobility. Secondly, accelerating access to real estate & mandating charging infrastructure in urban developments will reduce range anxiety and make EVs a more viable option for public transportation.”