Budget 2022 brings little cheer for auto and aviation

While announcements for the auto sector were largely limited to electric vehicles, the aviation sector is once again pinning its hopes on post-Budget redressal

By Manu Balachandran Forbes India Staff

Published: Feb 1, 2022 07:03:13 PM IST

Updated: Feb 1, 2022 07:22:36 PM IST

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India seems to be walking the talk on its electrification journey.

Image: Shutterstock

On February 1, Finance Minister Nirmala Sitharaman said that the government will introduce a new policy for battery swapping to encourage the use of electric vehicles (EV) and step up initiatives to boost EV infrastructure and ecosystem in the country.

“Considering the constraint of space in urban areas for setting up charging stations at scale, a battery swapping policy will be brought out and inter-operability standards will be formulated,” Sitharaman said. “The private sector will be encouraged to develop sustainable and innovative business models for ‘Battery or Energy as a Service’. This will improve efficiency in the EV ecosystem.”

The move is likely to give a much-needed impetus to push towards further electrification of vehicles in India, which has lagged countries such as the US and China.

“The roadmap laid out to usher in sustainable mobility in the Union Budget 2022-23 will bolster the electric mobility adoption in India,” says Rajesh Jejurikar, executive director, auto & farm sectors, Mahindra and Mahindra. “Battery swapping can offer a practical alternative to increase adoption of electric vehicles. As part of our Last Mile Mobility, we look forward to working with the government, policy-makers and our partners to formulate and implement the battery swapping policy. This will include introducing interoperability standards as well as driving innovation in Battery as a Service business models.”

Battery swapping is when the discharged battery is taken out and interchanged with one that is fully charged. While battery swapping may not be the preferred choice for four wheelers, it makes very good sense for two-wheelers and even three-wheelers.

“Battery Swapping & Energy as a Service (EAAS) will help accelerate the transition towards clean mobility,” says Vinkesh Gulati, president of the Federation of Automobile Dealers Associations. “The development of special mobility zones for electric vehicles and promoting clean technology for public transport validate government commitment to e-mobility, which would boost confidence in the EV industry in terms of manufacturing, sales, and create a sense of assurance among customers.”

Despite all the narrative around EVs, there have not been substantial gains in the segment since the past few years. Last year, India sold some 156,000 units of EVs, of which 126,000 were two-wheelers. China sold some 1.3 million EVs in 2020, according to Singapore-based market research firm Canalys, in a year marked by a pandemic, accounting for over 40 percent of the global EV sales.

"One of the most pressing needs of the day is to establish a network of battery charging and swapping stations across India that can eliminate the range anxiety and encourage people to adopt EVs with greater confidence,” says Varun Goenka, CEO and co-founder, Chargeup, a battery swapping service provider.

Aviation

With the government having finally sold Air India, there was not much to cheer for the aviation sector in the country.

The sector, which was expecting some form of support in terms of reduction in excise duty, will in turn now have to dole out more for aviation turbine fuel (ATF). On February 1, jet fuel prices rose to record levels following an 8.5 percent hike. ATF price was hiked by Rs6,743.25 per kilolitre, or 8.5 percent, to Rs86,038.16 per kilolitre in the national capital, marking the highest ever price for ATF.

“India's Union Budget 2022 had nothing for aviation or tourism,” aviation consultancy firm CAPA said on Twitter. “This was highly disappointing and insensitive given the near-broken state of these sectors, although somewhat expected. Industry will be pinning its hopes—as in the past—on post-Budget redressal.”