28Jul

Scope for Electric Vehicles in India

July 28, 2022 Feedback Advisory 33

Electric Vehicles or EVs as they are popularly known, have already made their foray into India for good. But is India really ready to embrace EVs in a full-fledged manner? Read on to find out more…

Introduction

At the outset, any automobile expert worth his salt would vouch for the fact that the future of EV in India looks really promising. And with the rapidly surging fossil fuel prices virtually hitting the roof, consumers are frantically scouting for alternative sources of energy that can power their vehicles, without burning a hole in their pockets.

Across the globe, there has been a huge clamour for sustainable and eco-friendly alternatives that can effectively replace their fossil fuel counterparts, whose days are increasingly numbered. It is here that the advent of electric vehicles assumes more significance than ever.

Many developed and industrialized nations such as the US, the UK, France, Germany, Norway and other countries in the European Union have taken a proactive stance in this regard by introducing laws that aim to curb the promotion of vehicles running on fossil fuels four years down the line.

India too, has joined the bandwagon in accordance with its aspirations to emerge as a force to be reckoned with on the global arena in the near future as far the marketing and usage of electric vehicles is concerned. The advantages that arrive with the use of e-transportation in India are far too great to be ignored.

Market Scenario for EVs in India

In the two-wheeler sector in particular, the country boasts of the leading unexploited market for EVs across the globe. As EVs are being launched expeditiously by various automobile manufacturers over the last few years, the foray of these vehicles into the consumer market has augmented remarkably.

According to the latest research, by 2025, the EV market is estimated to be valued at a minimum of ₹475 billion. Also, by 2025, the permeation of electric two-wheelers into the Indian auto market is slated to attain 15% by 2025 from the present 1%.

Initiatives taken by the Indian Government to promote EVs

With the Prime Minister Mr. Narendra Modi’s strong emphasis on the Make in India initiative, the mass production of EVs has gained even more momentum of late. The manufacturing sector is slated to become the biggest beneficiary in this regard, what with the global leader in EV manufacturing, Tesla, all set to foray into the Indian automobile sphere very soon.

The Government of India (GoI) has been very proactive to say the least in its endeavour to foster the usage of electric vehicles in the country. A host of measures have been adopted with regard to this aspect. They are enumerated as follows:

The Central Government in 2015 launched the Faster Adoption and Manufacturing of programme with the objective of decreasing the reliance on petroleum products and also on delving into the problems of emission from vehicles.

Currently, the FAME India programme is in the second stage of its execution with an overall budget outlay of INR 10,000 crore. The five-year programme came into effect from April 1, 2019.

On May 12, 2021, the Union Government ratified a Production Linked Incentive (PLI) programme for the creation of Advanced Chemistry Cell (ACC) for reducing the cost of battery in India. A decrease in the battery costs will in turn, translate into lesser prices of the EVs that will be more affordable for a larger section of consumers in the country.

On September 15, 2021, Electric vehicles were included under the PLI programme for Auto and Auto Components that was ratified by the Central Government. This five-year PLI programme will be executed with a budget disbursement of INR 25,000 crore that has been kept aside exclusively for this purpose.

On July 19, 2022, Mr. Krishan Pal Gurjar, the Minister of State for Heavy Industries, said that currently, an overall of 13.34 lakh electric vehicles are being used in India, whereas 27.81 crore vehicles were still running on the conventional mode of fossil fuels.

The Goods and Services Tax (GST) levied on electric vehicles has been decreased from 12% to 5%. Also, the GST on EV chargers and charging points have been lessened from 18% to 5%.

Recently, the Ministry of Road Transport and Highways (MoRTH) proclaimed that green-coloured number plates would be provided for electric vehicles, which will not be required to adhere to permit regulations. MoRTH also directed the states to remove the road tax levied on battery-run vehicles so that their preliminary prices will be less.

Challenges for EVs in India

While the Government of India is leaving no stone unturned in its earnest attempts in making the nation more EV-friendly, there remains some, in fact, several very crucial hurdles that need to be overcome before India can claim itself as a country that has completely embraced the EV industry. The roadblocks that are preventing the nation from becoming fully EV-friendly are described as below:

As many as 63% of automotive consumers in India are still not convinced that electric vehicles can be bought within their financial means. This type of notion can be widely attributed to the huge capital costs involved in buying a EV.

While there has been a surge in the presence of EVs across India, the absence of an ample charging framework is a massive obstacle that needs to be resolved at the earliest. In sheer contrast to the number of conventional fuel refilling bunks found in plenty across the length and breadth of the country, the number of EV charging points are just abysmal to say the least.

In October 2021, the country recorded an immense dearth of 1,201 million units of power supply, the biggest in 5.5 years because of a fall in the coal reserves. If India wants to fully become an EV nation, it first has to tackle the fundamental woes of power dearth.

Conclusion

Notwithstanding the COVID-19 pandemic that has had a huge impact on the Indian automobile market, industry pundits still remain upbeat on the prospects of India emerging as the global epicentre for EV, owing to the country’s tremendous consumer potential that can translate into the much-needed success which the Indian automobile industry is desperately craving for.

However, circumventing all of these challenges described above is no mean task by any stretch of imagination and to, in fact, accomplish them, takes a lot of will and enormous amount of efforts from the part of the Government. It has to be seen if this is just misplaced optimism or it is indeed the dawn of the rosy things that are in store for the Indian automobile industry and its consumers as far as the future of EVs in the country are concerned.