How Supportive Is the Current EV Policy Ecosystem To Drive The Sector Forward?

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Being one of the largest global automotive markets, India has a big role to play in the Electric Vehicle (EV) revolution. Extensive usage of EVs is a viable solution for our country’s myriad commuting-related challenges, whether it be air pollution, noise pollution, energy conservation, or rising fuel prices. 

The Government of India has taken early steps in terms of promotion and incentivisation of EV manufacturing, sales and usage, via policy frameworks and budgetary strategies. It has also demonstrated a strong commitment in introducing electric mobility in India and announced a very ambitious plan of making India a primarily electric car driven nation by 2030.

With this strong emphasis of the Indian government on EVs, the country has a huge potential of becoming one of the largest electric vehicle markets in the world. This will provide several opportunities for automobile manufacturers, electric vehicle component manufacturers and other players along the electric vehicle value chain, and promote employment generation, greenfield investments, technology development and transfers, amongst others.

There are other economic and environmental benefits linked to growth of EV sector that include reduction in physical imports of oil and depletion of foreign exchange reserves through reduced import bill, promotion of energy security, creation of better investment opportunity in generation of clean energy, and a lower cost of integrating renewables through “smart charging”, etc.

With this in mind, let us read what our experts have to say about the current EV policy ecosystem in the country… 

In India, the electrification of the transportation sector is considered a vital strategy to reduce greenhouse gas (GHG) emissions and air pollution. Therefore, the central and state governments have introduced policies, financial schemes, guidelines, and standards to accelerate the uptake of electric vehicles (EV). In addition to its favourable impact on the environment, transition to electric mobility can also expedite India’s nationally determined contribution (NDC) goals to reduce GHG emission intensity of its gross domestic product (GDP) by 33-35% by 2030, from 2005 level. Though EVs have been around for a long time in India, recent developments in the policy ecosystem have been catalytic in the electrification of the transportation sector in the last decade. 

Central Policies 

In 2010, the Ministry of New and Renewable Energy (MNRE) under the Alternate Fuels for Surface Transportation Program (AFSTP) incentivised EV purchase. While this program is a short-term plan with fewer incentives, a long-term plan called National Electric Mobility Mission Plan 2020 (NEMMP) was launched in 2013. The aim was to promote the uptake of electric and hybrid vehicles mainly to reduce carbon dioxide (CO2) emissions and oil dependency and focus on fast-tracking the EV manufacturing sector. The plan proposed 6-7 million sales of electric and hybrid vehicles in India by 2020. However, the uptake has been slow with only about 5.7 lakh EVs being registered since 2012.

In 2015, as part of the NEMMP, 2020, the Department of Heavy Industry (DHI) implemented the Faster Adoption and Manufacturing of Electric Vehicles in India (FAME) India Scheme. Under phase I of the scheme, about 2.78 lakh electric and hybrid vehicles were supported and 465 buses sanctioned. Phase II of this scheme, started in 2019 for a period of three years, will cover 7000 e-buses, 5 lakh e-3 wheelers, 55,000 e-4 wheeler passenger cars and 10 lakh e-2 wheelers.

Other EV-friendly measures include the sale of electric vehicles without batteries, and reducing the upfront cost of EVs by 30-40%. Additionally, the vehicle scrappage policy announced recently in the Budget will come into effect from 1st April 2022. The policy is expected to remove old vehicles, while promoting the adoption of green fuel and a shift to EVs.

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State Policies

States have a significant role in the successful implementation of policies formulated by the Centre. In 2019, the Government of India requested states to incentivise EVs and introduce them in shared mobility and public transport operations. Other important measures suggested by the Centre include green registration plates for zero-emission vehicles, exemption of EVs from permit for plying as transport vehicles, and license to those in the age group of 16-18 years to drive E-scooters. State governments are also formulating policies focussing primarily on adoption EVs in the two and three-wheeler segments and public transport. States are also considering pairing renewable energy with EVs, and encouraging investments in the EV manufacturing ecosystem and public charging infrastructure. 

Creating an Enabling Ecosystem 

As a result of various policy measures, EV sales in the country grew by 20% in 2019-20; sales for the year 2020-2021 were disrupted due to the pandemic. However, for a smooth and widespread transition to electric mobility nationwide, both central and state EV-specific policies, schemes, guidelines, and standards need to be aligned. As urban transport is a major source of GHG emissions and air pollution in cities, policy measures such as regulation of conventional vehicle registration, taxing entry in congested zones, and supporting cleaner fuel and green mobility options such as EV, should be encouraged.

With the current rise in fuel prices and increased demand for personal vehicles, EV uptake can be pushed as an integrated policy/measure by the central and state governments. Reducing range anxiety, and providing access to safe, affordable, reliable charging infrastructure and customer acceptance will be critical components for EV policies. That said, to drive the clean mobility transition in India, an enabling EV policy ecosystem is vital.

By Anantha Lakshmi Paladugula – Research Scientist, Center for Study of Science, Technology and Policy (CSTEP)

India, like many nations of the world, is looking to promote the adoption of electric vehicles (EVs) with the aim of reducing vehicular emissions that contribute to air pollution and climate change. The efforts of the industry and the government so far have, however, met with only modest success. Driving adoption of EVs and creating a nationwide ecosystem for it is still an ongoing process. India could look at countries that have achieved a fair degree of success in this direction, for ideas. 

How the world leaders in EV adoption went about it

Norway has the highest per-capita representation of EVs in the world. Over the past couple of decades, the government there has exempted EVs from various taxes and tolls and offered them free parking in large cities. High-emission vehicles pay higher taxes, while low and zero-emission vehicles pay lower, or no taxes. Norway has also invested heavily in charging points and infrastructure and is welcoming private investors.

California, which accounts for about half the EVs on American roads, offers a point-of-sale price reduction on EV purchases, depending on the battery capacity. The State has invested heavily in putting battery-electric, plug-in hybrid, and hydrogen fuel-cell cars on its roads. The Californian Governor has also issued an executive order mandating sale of only zero-emission passenger vehicle cars by 2035.

China, which accounts for half the world’s EVs sales, achieved its numbers on the back of generous subsidies offered by the Government since 2009. Last year, China instructed automakers that EVs should constitute 40 percent of their sales by 2030. China is planning to augment its large EV charging stations network on the back of an infrastructure stimulus package announced last year.

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The policies and strategies of Norway, US or China may or may not be replicable in India, but they do open up lines of thought. 

Positive signs in India’s existing EV tax and tariff regimes 

The FAME-II scheme launched in April 2019 has an outlay of Rs 10,000 crore and seeks to support 10 lakh two-wheelers, 5 lakh three-wheelers, 55,000 four-wheelers and 7,000 buses. On the taxation front, India currently charges a GST of 5 percent on EVs, a minimum of 28 percent on internal combustion engine (ICE) vehicles, and in excess of 50 percent for some vehicle types. This is a significant arbitrage. India’s EV tax regime is, in this respect, even better than Norway’s.

Power distribution companies (DISCOMs) across the country have been advised to create a database of public charging stations and make separate metering arrangements for public charging. The tariffs for EV charging are different in different States, and many States have declared EV as a separate tariff category. This is a good thing, because any entity or individual can now set up charging stations, creating an additional revenue channel for DISCOMs. 

Tariffs for EV charging should be designed in a way that allows DISCOMs to recover their costs while also making EV charging affordable for consumers. Ideally, EV charging should neither get a subsidy nor subsidize any other customer. Presently, EV-specific tariffs are higher than residential tariffs but lower than commercial tariffs in most Indian States and Union Territories.

Features that an EV policy should ideally have

EVs are likely to be first adopted in cities. Public spaces should therefore be identified across each city and charge-point operators should be authorized by the government. A large network of public charging points should be established to cater to a large EV fleet. This should ideally take the form of a plug-and-play model, which seems to work best globally. Moreover, the operations of such services must be entirely digitalized, right down to the mode of payment for end-users.

Delhi is showing the way for the rest of India

Delhi’s Electric Vehicle Policy 2020 offers fiscal incentives in addition to those in the FAME-II scheme, including sizable subsidies on two-wheelers and cars. Moreover, road tax and registration fees are waived off for EVs. 

Delhi is reportedly aiming to have more than 10,000 EV chargers operational by December 2021. All commercial and institutional buildings that have a parking capacity of more than 100 vehicles will be required to reserve at least five percent of their parking space for EVs and slow EV chargers. Delhi’s building by-laws have already been amended to enable this.

There is no fixed formula for ensuring the success of the ongoing shift towards EVs, but there is certainly no dearth of ideas to go about it.

By Awadhesh Jha, Vice President – Charge & Drive and Sustainability, Fortum India Pvt Ltd.

India will see a massive uptick in its electric fleet in the coming years. EVs are set to play a much larger role as customers and fleet owners realize their economic and ecological benefits. The pandemic has put the focus back on the environment and over the next two years, the EV space is set to go through many evolutions in terms of advanced vehicles and battery technology. The next year will help drive a more collected view on how India’s electrification will move forward. 

As the Indian automobile industry aims to be among the world’s top three in automobile manufacturing by 2026, the path towards e-mobility is a crucial aspect for this. Aligned with growing pollution woes and fuel price hikes, electrification will ensure greater energy security for the country and less dependence on the economy. However, transition to EVs and its successful implementation has multiple challenges right now. 

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These challenges constitute lack of price parity, absence of charging infrastructure and a conducive EV manufacturing ecosystem and value chain. The government and the private players need to work in tandem to build a thriving local ecosystem, which will help drive demand and make EVs affordable. 

When we talk of policy support, the government has certainly taken many pragmatic steps to promote EVs.  For instance, the state EV policies from Delhi, Telangana amongst others along with the battery-vehicle registration policy have been critical steps that will drive growth for EVs. The battery policy helps delink the cost of battery from the vehicle and therefore reduces the price of the vehicle substantially. This policy can give way to new batteries on lease business models. This way, the onus of both the vehicle & battery stays with the OEM, ensuring better performance & safety standards. Some states are laying out several initiatives to promote EVs such as Delhi, where the Delhi Government has been lauded for its efforts to drive mass awareness on the benefits of EVs.

FAME and FAME II are critical steps for EV adoption and will help build an indigenous supplier and manufacturing ecosystem. The recently announced scrappage policy will also pave way for new vehicles and contribute to sustainable mobility, especially in the commercial segment. The scrappage policy will push for low emission and energy efficient vehicles, by phasing out old models. The government continues its focus on localisation and import substitution, and the latest incentives under the PLI scheme will focus on lithium-ion cell manufacturing in India and the role of fabrication units. 

We expect the Government to keep introducing concrete measures that support this outlay and kickstart production of lithium-ion cells in India – which are a key component to power EVs.  EV financing also remains a major concern and we expect that the government should facilitate loan schemes to make for customers, especially in commercial segments. 

 In India, large scale adoption of EVs needs to be driven by customer acceptance, which will involve a firsthand experience of the economic benefits that EVs have to offer. However, it is also important that the Government also ensures a successful implementation of the new and existing schemes to make EVs a reality in India. Continued focus on import substitution, localization and self-reliance will help create a formidable EV ecosystem, while a push towards indigenous R&D will help bring down the cost of ownership and increase adoption of electric vehicles. 

By Jeetender Sharma – Founder & Managing Director, Okinawa

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