The E-Vehicle Policy and Related Developments in India

Reasons for Low Performance of Electric Vehicle Industry

The government’s ambitions not with standing, the Indian EV market currently has one of the lowest penetration rates in the world. There are multiple layers to this.
  1. Price Volatility:
    • The first has to do with policy volatility. E-mobility is a nascent industry in India and most of the developing countries. Capital costs are high and the payoff is uncertain.
    • The unrealistic quasi-policy statement that all new vehicles should be e-vehicles by 2030 is a prime example.
    • Thankfully, that has been toned down to 15% of all vehicle sales in the next five years.
    • And inconsistencies remain. For instance, while electric vehicles are taxed at 12% under the goods and services tax (GST), batteries were taxed at 28% until recently. This has now been lowered to 18% but the discrepancy still exists.
  2. Lack of policy certainty: Cannot frame in Isolation:
    • Second, this lack of policy certainty spills over into perhaps the single most important element of enabling e-vehicle usage: charging infrastructure.
    • If a switch to e-vehicles is to have any significant effect on pollution, the sector cannot be seen in isolation.
    • An EV is only as clean as the electricity source it uses. In India, thermal sources account for about 65% of capacity.
  3. Local and Private Investment results in Low Cost Production Technology:
    • Third, localization is another tricky area, as the strife caused by the rupee’s depreciation has shown.
    • India does not have any known reserves of lithium and cobalt, which makes it entirely dependent on imports of lithium-ion batteries from Japan and China.
    • It is necessary to acquire mines in Latin America and Australia. But that will not be enough. Private investment in battery manufacturing plants and developing low cost production technology is a must.
    • Stabilizing the policy environment when it comes to taxes, non-fiscal incentives and the infrastructure needed to tackle.

Government push for Electric Vehicles in past

  • “Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India”, popularly known as FAME India scheme for improving and increasing electric mobility in India.
  • Government is providing Rs. 437 crore subsidy to 11 cities under FAME India, for launching electric buses, taxis and three-wheelers.
  • Effort is to significant boost to electric mobility with the aim to roll out a number of electric buses, electric three-wheelers and electric shared cabs for multi-modal public transport.
  • It is envisaged that early market creation through demand incentive, in-house technology development and domestic production will help industry reach a self-sufficient economy of scale in the long run by around the year 2020.

NITI Aayog’s mobility plan

  • The government must subsidize the EV industry while penalizing conventional cars.
  • Taxes and interest rates for loans on EVs should be lowered.
  • The sale and registration of conventional cars should be lowered
  • Using taxes from diesel and petrol car sales to create electric charging stations.
  • It also suggests setting up “a manufacturer consortium for batteries, common components, and platforms to develop battery cell technologies and packs and to procure common components for Indian original equipment manufacturers.”

Location: Thiruvananthapuram, Kerala, India

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