Year-ender 2024 | Policies that will redefine future of mobility in India

Electric Vehicles

The government of India has played an instrumental role in shaping the continuously evolving automotive landscape. Continued support through subsidies, tax incentives, and infrastructure enhancements have fostered a thriving environment for Electric Vehicles (EVs). While the second edition of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India (FAME) scheme concluded on March 31, 2024, a slew of other policies were notified to give a renewed thrust to battery-driven vehicles.

Some of the recent initiatives taken by the government are as follows:

Focus on EV Ecosystem in Interim Budget 2024

Finance Minister Nirmala Sitharaman, in the Interim Budget 2024, outlined certain initiatives that that will create an ecosystem for EV production and vehicle charging infrastructure. In her budget speech, Sitharaman emphasised the importance of increasing the adoption of electric buses through the Payment Security Mechanism (PSM). She also said that a scheme on bio-manufacturing will be launched to promote “green growth”.

Electric Mobility Promotion Scheme (EMPS) 2024, which came into force once the FAME II scheme concluded, offered subsidies on electric two, three and four wheelers. However, the EMPS was initially valid for four months till July 31 but was later extended till September-end.

Scheme to Promote Manufacturing of Electric Passenger Cars (SMEC) in India was notified on March 15, 2024. Under this EV policy, approved applicants are required to invest a minimum of Rs 4,150 crore (US$ 500 million) within three years, achieving 25 percent Domestic Value Addition (DVA) during this period and 50 percent within five years. The scheme allows limited imports of e-4Ws at reduced customs duty, capped at 8,000 vehicles per year. While the EV policy was tailormade for Tesla, none of the global auto giants have yet applied for it.

BCD elimination during Union Budget 2024-2025
Sitharaman, who was re-appointed as the FM in the Modi 3.0 cabinet, made several announcements to boost EV production. While presenting her budget, she stated that the government will exempt Basic Custom Duties (BCD) on certain critical minerals like lithium, copper, cobalt, and rare earth elements (REE) which are used in lithium-ion battery production. Furthermore, the government also extended the exemption to import capital goods and machinery for lithium-ion cells.

The 2023-24 budget report mentioned that the government's Automotive Production Linked Incentive (APLI) programme has drawn in investments of Rs. 67,690 crores, with Rs. 14,043 crores invested by March 31, 2024.

The Prime Minister Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE)  scheme which many reckon is the third edition of the FAME policy, was notified on September 29, 2024. With a total outlay of Rs 10,900 crore, the scheme would be applicable from October 1, 2024, to March 31, 2026. EMPS-2024 has been also subsumed under this new policy.

The budgetary allocation includes Rs 3,679 crore for subsidies to incentivise 28 lakh e-2Ws, e-3Ws, e-ambulances, and e-trucks; Rs 4,391 crore for the procurement of 14,028 e-buses by public transport agencies, among others. As of November 20, 2024, Rs 600 crore in claims have been submitted under the scheme, with Rs 332 crore disbursed.

The PM e-Bus Sewa – Payment Security Mechanism (PSM) Scheme, which was notified on October 28, 2024 with a total financial outlay of Rs 3,435.33 crore, aims to ensure payment security for OEMs/operators in case of default by Public Transport Authorities (PTAs) for e-bus procurement and operations

Looking Forward: 2025 and beyond
All eyes are now on Automotive Mission Plan 2047, which will be announced next year and will pave the way for India to become an advanced industrial powerhouse. At present, the Ministry of Heavy Industries (MHI) is holding discussions with auto industry associations such as ACMA and SIAM to work out the modalities. The AMP 2047 aims to meet the 30 percent target of exporting auto and auto components by 2030 and enhancing that further to 50 percent by 2047.