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					</table><p>A parliamentary committee has asked the government to seek postponement of the application of the <a href="https://european-union.europa.eu/index_en" target="_blank" rel="noopener">European Union</a>’s Carbon Border Adjustment Mechanism (CBAM) to the Micro, Small &amp; Medium Enterprises (MSME) sector by at least three years.</p>
<p>In a recent report, the <a href="https://sansad.in/rs/committees/13?departmentally-related-standing-committees" target="_blank" rel="noopener">Standing Committee on Commerce</a> expressed concern over the potential hindrances posed by tariff and non-tariff barriers raised by the EU and the U.S., which could impede the growth of the MSME sector.</p>
<p>Early last year, India and China <a href="https://www.mercomindia.com/india-voices-concern-over-europes-carbon-tariff-measure-at-wto" target="_blank" rel="noopener">expressed</a> concern over CBAM at the World Trade Organization (WTO). The issue is likely to figure at the WTO’s Ministerial Conference to be held in Abu Dhabi from February 26 to 29.</p>
<p>While acknowledging the noteworthy role played by engineering exports in the overall merchandise exports of India and the prospect of achieving the $300 billion export target by 2030, the standing committee felt that Indian manufacturers in the MSME sector may not have the financial resources to make changes to overcome the challenge posed by CBAM.</p>
<p>To protect the MSME sector from the U.S.’ Expansion Act of 1962 and non-tariff barriers in the form of CBAM, the committee recommended that the government engage at the highest level with the U.S. and EU, respectively, to resolve the matter.</p>
<p>It also recommended putting in place a robust mechanism to support and equip MSMEs to counter the adverse effects of CBAM.</p>
<p>With the European Commission adopting the rules governing the implementation of the carbon tariff on imported goods, the transitional phase of CBAM <a href="https://www.mercomindia.com/eu-adopts-rules-governing-carbon-tariff-measure" target="_blank" rel="noopener">started</a> last October. It will be in force until the end of 2025, with full implementation starting in 2026. CBAM will initially apply to imported products and commodities like cement, iron and steel, aluminum, fertilizers, electricity, and hydrogen.</p>
<p>The carbon tariff measure has governments and exporters of goods from countries outside the EU worried because they fear their competitiveness will be adversely impacted by having to pay a price for the carbon emissions generated during the manufacture of goods. The tariffs on goods manufactured by hard-to-abate sectors like steel and cement are expected to be as high as 35%.</p>
<p>Besides manufacturers in the MSME sector, the Indian steel industry is also likely to face negative consequences of the EU’s carbon tariff measure.</p>


Seek Deferment of CBAM by Three Years, Parliamentary Panel Tells Government


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					</table><p>As of September 2023, EV sales in India <a href="https://www.mercomindia.com/electric-vehicle-sales-q3-2023" target="_blank" rel="noopener">totaled</a> 371,214 units, indicating a year-over-year increase of 40% compared to the 264,781 units sold in the corresponding period the previous year. Although there was a minor drop in sales during the last quarter (371,340 units), EVs made their presence felt on Indian roads, accounting for 7.3% of the overall automobile sales.</p>
<p>In January, EV sales in India <a href="https://www.mercomindia.com/ev-sales-clocked-record-one-million-units-2022" target="_blank" rel="noopener">soared</a> to one million units, a 300% surge from the 322,877 units sold the previous year.</p>
<p><strong>Central Policies </strong></p>
<p>Amid a surge in EV sales, particularly for two-wheelers (e-2Ws), the government <a href="https://www.mercomindia.com/electric-two-wheeler-subsidy-10000-june" target="_blank" rel="noopener">reduced</a> the subsidy for e-2Ws from ₹15,000 ($181) to ₹10,000 ($121). The Ministry of Heavy Industries (<a href="https://heavyindustries.gov.in/" target="_blank" rel="noopener">MHI</a>) also lowered the cap on incentives for e-2Ws from 40% to 15% of the total vehicle cost under the Faster Adoption and Manufacturing of Hybrid &amp; Electric Vehicles in India Phase-II (FAME-II) program.</p>
<p>The ministry also <a href="https://www.mercomindia.com/norms-auto-certification-pli-program" target="_blank" rel="noopener">introduced</a> standard operating procedures as part of the Production Linked Incentive (PLI) program to guide automotive companies and component manufacturers in testing and certifying their products. The PLI program aims to provide financial incentives to encourage domestic manufacturing of Advanced Automotive Technology products and attract investments in the automotive manufacturing value chain.</p>
<p>The program is divided into two categories: Champion OEM, focused on electric or hydrogen-powered vehicles, and Component Champions, emphasizing the production of high-value and high-tech components.</p>
<p>The Union Cabinet <a href="https://www.mercomindia.com/cabinet-program-to-boost-urban-electric-mobility" target="_blank" rel="noopener">greenlighted</a> the &#8220;PM-eBus Sewa&#8221; program to promote sustainable urban transportation and economic growth. Under this initiative, 10,000 electric buses (e-buses) will be deployed nationwide, with a budget of ₹576.13 billion (~$6.9 billion). The program specifically targets cities with a population of 300,000 and above, according to the 2011 census, covering all union territory capitals, the northeastern region, and hilly states.</p>
<p>In the same month, a parliamentary committee <a href="https://www.mercomindia.com/parliament-panel-extension-fame-program-2027" target="_blank" rel="noopener">suggested</a> extending Phase II of the FAME for a minimum of three years beyond March 31, 2024, to establish EVs as a standard in the Indian automotive market.</p>
<p>The committee emphasized that EVs remain costly, and a reduction in subsidies under FAME-II for two-wheelers could widen the cost disparity with ICE vehicles, potentially discouraging EV adoption.</p>
<p>In July, MHI <a href="https://www.mercomindia.com/ministry-retender-20-gwh-battery-pli" target="_blank" rel="noopener">announced</a> its decision to reissue the tender for manufacturing the unallocated 20 GWh Advanced Chemistry Cell for energy storage under the PLI program. The initial bidding for the Program concluded in March 2022, with successful bids from Ola Electric Mobility, Reliance New Energy, and Rajesh Exports, totaling 50 GWh capacity. However, Hyundai Global Motors withdrew from the bidding process, resulting in an unallocated capacity of 20 GWh, prompting tender issuance.</p>
<p>In September, MHI <a href="https://www.mercomindia.com/ministry-amends-safety-compliance-evs-pli-fame-ii" target="_blank" rel="noopener">revised</a> testing parameters to enhance human safety for EVs eligible for incentives under the PLI and FAME II programs. The updated safety measures will be mandatory for claiming incentives under these programs starting from October 1, 2023.</p>
<p>The Small Industries Development Bank of India, a government-owned lender, <a href="https://www.mercomindia.com/sidbi-electric-vehicles-affordable" target="_blank" rel="noopener">initiated</a> a pilot program called Mission 50K-EV4ECO. The primary objective is to reduce the cost of capital for acquiring EVs, with a particular focus on 2- and 3-wheelers. This initiative involves both direct and indirect lending practices.</p>
<p>In another report, the Parliamentary Standing Committee on Industry <a href="https://www.mercomindia.com/uniform-electric-vehicle-policy" target="_blank" rel="noopener">recommended</a> that the government formulate a consistent and stable national policy on electric mobility to create a promising environment for the EV industry to thrive. The committee thinks that frequent changes in the policies relating to EVs create uncertainties in the market.</p>
<p>In February, the government <a href="https://www.mercomindia.com/india-lithium-reserves-in-jammu-kashmir" target="_blank" rel="noopener">disclosed</a> the identification of 5.9 million tons of lithium reserves in the Reasi district of Jammu and Kashmir, marking the first such discovery in India. The Geological Survey of India was responsible for this finding. Lithium, a non-ferrous metal and a crucial component in EV batteries holds strategic importance for the EV industry.</p>
<p>In November, the Ministry of Mines <a href="https://www.mercomindia.com/ministry-of-mines-issues-critical-minerals-blocks" target="_blank" rel="noopener">issued</a> a call for proposals to allocate concessions for 20 vital mineral blocks in seven states and one union territory. The determination of qualified bidders will hinge on the highest percentage they quote regarding the value of dispatched minerals. The deadline for bid submissions is set for January 22, 2024.</p>
<p>Tamil Nadu <a href="https://www.mercomindia.com/tamil-nadu-concessions-attract-%E2%82%B9500-billion-ev-manufacturing" target="_blank" rel="noopener">aims</a> to attract ₹500 billion (~$6.04 billion) in investments for EV manufacturing, generating 150,000 new jobs over the next five years, as outlined in the state government&#8217;s EV Policy 2023.</p>
<p>The policy includes provisions to support the manufacturing of EVs, EV components, and charging infrastructure through an EV special manufacturing package. This comprehensive initiative is set to be effective for five years.</p>
<p>Bihar has also <a href="https://www.mercomindia.com/bihars-ev-policy-%E2%82%B9125000-incentives-new-purchases" target="_blank" rel="noopener">introduced</a> a new EV policy to expedite the adoption of EVs and the establishment of EV charging infrastructure in the state. The policy aims to achieve a target where electric vehicles constitute 15% of all new vehicle purchases in the state by 2028.</p>
<p>The policy offers incentives up to ₹125,000 (~$1,499) for the first 1,000 purchases of four-wheeler EVs. Additionally, there is a minimum 50% rebate on Motor Vehicle Tax for all new EVs in Bihar.</p>


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