Sunday 15 / December / 2024
New Delhi: India has come a long way in manufacturing and adoption of electric vehicles since the launch of its first electric car in 1993. Today, with its expanding demand for EVs, India’s domestic EV market is expected to see a 49 percent compound annual growth rate (CAGR) between 2022 and 2030, accounting for 10 million annual EV sales by 2030 .
One major factor behind the growth of the EV sector in India is the active incentive mechanism adopted by the government and an equivalently enthusiastic response from private companies and consumers alike. The government is targeting expansion in EV markets by aggressively incentivising both the supply and demand sides of the market.
On the demand side, the government has announced various incentive mechanisms for consumers, encouraging them to switch from internal combustion engine (ICE) vehicles to EVs. These include purchase incentives or direct discounts to the consumer, interest subventions like discounts on interest rates on loans for the purchase, road tax, and registration fee exemptions.
On the supply side, the government has initiated a production-linked incentive (PLI) scheme in the automotive sector with a total outlay of Rs. 259 billion for manufacturing EVs in India.
With this, the PLI scheme in Advanced Chemistry Cell with Rs.181 billion outlay stands to provide a significant boost to EV manufacturers in the country. Moreover, the government also launched FAME (Faster Adoption and Manufacturing of (Hybrid and) Electric vehicles), its flagship scheme for promoting electric mobility in 2015 and further extended it to the second phase in 2019 with an allocation of Rs. 100 billion . Provisions for tax incentives through GST cuts accompanied by state-level subsidies are further set in place for the expansion of the EV sector.
A major challenge in EV adoption is the behavioural inertia among consumers. The fear that EVs are not economical in terms of charging time, safety issues and low battery life compared to ICE vehicles is common among consumers.
The government has committed itself to bringing attitudinal change through proper information dissemination channels on this subject. E-Amrit portal launched by the government actively informs potential users about the benefits of EVs and various incentive schemes.
India is also experiencing a massive transformation of the public transport landscape. Success in adoption of E-vehicles in transport sector would promote adoption of E-vehicles in all the sectors. There were only around 1000 electric buses in 2021, with Maharashtra topping the list with 552 buses, with Mumbai running 246 EV buses on its roads.
Under the second phase of the FAME scheme, more than 3,000 EV buses are operating across the country today, and the goal to achieve 7,000 buses on roads by next year is set afoot. Tata Motors is expected to provide 3,600 EVs to various states, including Delhi Transport Corporation, West Bengal Transport Corporation and Bengaluru Metropolitan Transport Corporation.
Given the expansive road network and size of the population dependent on public transport, radical transformation of state public transport is an important policy initiative.
For the same, Andhra Pradesh announced a five-year policy targeting the conversion of 11,000 state public transportation buses and all government vehicles into EVs. Similarly, State of Kerala intends to introduce more than 6,000 EV buses by 2025. States of Delhi, Maharashtra, Tamil Nadu, and Uttar Pradesh are also steering their policies towards rapid and rampant EV buses adoption for public mass transportation.
Corporates are also playing their part in national EV adoption. Private sector companies are deploying electric vehicles for their employee transportation and launching policies incentivising their employees to shift to EVs .
EV retail sales are expected to double by 2023, to 2.2 million units. The Convergence Energy Services Limited (CESL), a government-owned subsidiary has placed an order for more than 6,400 buses under India’s National Electric Bus Program (NEPB), early this year. This order is expected to fulfill EV bus demands not only for prime geographical areas in India including Delhi, Telangana, Haryana, Kerala, Gujarat, but also for distance and hilly state of Arunachal Pradesh.
EV adoption is a crucial part of the over-arching environmental goal of the government to reduce carbon intensity by 45% by 2030 and achieve net zero emissions by 2070.
Thus, the government has set a goal to shoot up EV sales for private cars by 30%, commercial vehicles by 70%, and two-and three-wheelers by 80% by 2030. Moreover, EV adoption is also closely linked to the goal of employment generation, with the EV industry expected to create approximately 50 million direct and indirect employment opportunities by 2030.
In essence, the expansion of EV market is a clear example that there doesn’t have to be a trade-off between growth and the environment. Instead, environmental protection and economic growth are intertwined. Continued use of ICE vehicles, leading to adverse effects on the environment and public health with its toxic emissions, is, in turn, burdening our economy and ecosystem.
This, in turn, dampens economic development. On the other hand, the adoption of EVs takes care of the concerns related to health and the environment, along with the inalienable goals of economic growth and employment generation through the growth of EV market. Promotion of EVs has double edged benefits, one towards clean environment and the other in reducing crude imports. India’s E-mobility transformation clearly shows that it cares for environment.
