RSTV: POLICY WATCH- ELECTRIC VEHICLES IN INDIA
Introduction:
The government has approved a 10,000 crores programme under the ‘Faster Adoption and Manufacturing of Electric Vehicles in India II for promotion of Electric Mobility in the country. The main objective of the scheme is to encourage Faster adoption of Electric and hybrid vehicle by way of offering upfront Incentive on purchase of Electric vehicles and also by way of establishing a necessary charging Infrastructure for electric vehicles. The scheme will help in addressing the issue of environmental pollution and fuel security. The GST reduction for electric vehicles from 12% to 5%. Finance Minister announced additional income tax reduction of 1.5 lakh rupees on loans taken. Government is on the way to make India a global manufacturing hub in electric vehicles.
Infrastructure’s need:
- There is a strong believe that electric infrastructure will have a massive scale going forward.
- In fact, Ather has more than 30 charging stations in Bengaluru while the other companies in this space are yet to foray into support infrastructure.
- As of today, there are only 250 charging stations in the country and they mostly catering to three-wheelers. To make this transition viable, infrastructure is a key factor.
- SIAM (Society of Indian Automobile Manufacturers) the nodal body for Indian automobile industry reports that the country currently sells close to 750,000 electric vehicles a year, a majority of these are three wheelers, which sold 6,30,000 units, with 1,26,000 of these three-wheelers.
- A longer-term policy priority has to be the setting up of lithium battery production and solar charging infrastructure of a scale that matches the ambition. The Centre has accepted some of the demands of the auto industry to popularise EVs.
- The government should provide incentives for CNG vehicles and should also come out with a scrappage plan for vehicles to incentivise customers to buy new vehicles.
Government Initiatives:
- The government aims to see 6 million electric and hybrid vehicles on the roads by 2020 under the National Electric Mobility Mission Plan 2020.
- Faster Adoption and Manufacturing of Electric Vehicles in India (FAME India Scheme) for improving electric mobility in India.
- The GST reduction for electric vehicles from 12% to 5%.
- The Union power ministry categorized charging of batteries as a service, which will help charging stations operate without licences.
- Implementation of smart cities would also boost the growth of electric vehicles.
Concerns:
- The Indian electric vehicle (EV) market currently has one of the lowest penetration rates in the world.
- Capital costs are high and the payoff is uncertain.
- Affordability of e-vehicles (EVs) and the range they can cover on a single battery charge.
- The Indian EV industry has been hit hard due to rupee’s dramatic depreciation in recent months.
- Local production of inputs for EVs is at just about 35% of total input production.
- The production will be severely affected in terms of production costs.
- The Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles (Fame) framework has been extended repeatedly.
- An uncertain policy environment and the lack of supporting infrastructure are major roadblocks.
- India’s limited ability to manufacture cost effective batteries.
- India does not have any known reserves of lithium and cobalt, which makes it dependent on imports of lithium-ion batteries from Japan and China.
- High rate of GST on EVs when government is trying to promote EVs.
- Lack of attention on building charging infrastructure.
Way Forward:
- For EVs to contribute effectively, we need commensurate efforts in developing an entire ecosystem.
- Need to shift the focus from subsidizing vehicles to subsidizing batteries because batteries make up 50% of EV costs.
- Increasing focus on incentivizing electric two-wheelers because two-wheelers account for 76% of the vehicles in the country and consume most of the fuel.
- A wide network of charging stations is imminent for attracting investment.
- Work places in tech parks, Public bus depots, and Multiplexes are the potential places where charging points could be installed. In Bangalore, some malls have charging points in parking lots.
- Corporates could invest in charging stations as Corporate Social Responsibility compliances.
- Addressing technical concerns like AC versus DC charging stations, handling of peak demand, grid stability etc.
- Private investment in battery manufacturing plants and developing low cost production technology is needed.
- India is highly dependent on thermal sources, which account for about 65% of current capacity. As EV adoption increases, so should the contribution of renewables.
- Need for a policy roadmap on electric vehicles so that investments can be planned.
- Acquiring lithium fields in Bolivia, Australia, and Chile could become as important as buying oil fields as India needs raw material to make batteries for electric vehicles.
- Providing waiver of road tax and registration fees, GST refunds and free parking spaces for EVs.
Conclusion:
- The budgetary measures will have an immediate impact on the pricing of electric vehicles and bring in more models, but it will take a sustained effort by the Centre, in partnership with State governments, to enable a fast rollout of charging infrastructure.
- In a bold and far-reaching move, India’s electric vehicle goals are set to flourish if NITI Aayog has its way.
- The government think tank moved a Cabinet note to address e-mobility targets for a greener India, which emphasises on the sale of only electric vehicles by the year 2030.
- This would go a long way in addressing India’s clean fuel ideology and reduce high pollution levels.
- The government said it is planning to set up a National Mission on Transformative Mobility and Battery Storage to bring clean and connected technologies that can usher in an era of shared and sustainable EV infrastructure in the country.
