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Is India's EV policy comprehensive enough?

The creation of a robust domestic manufacturing and supply chain with the right technologies and performance capabilities can enable India to emerge as a global EV component manufacturing hub

September 26, 2022 / 03:26 PM IST
Representative image

Representative image

The electric vehicle (EV) ecosystem has been under intense scrutiny over the last several months. Despite various problems and challenges it is a certainty that EV’s are the future. Accordingly India’s EV policy and regulatory framework is evolving.

First Steps

In April 2015, India launched the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme, when EVs were considered an emerging technology. Under this scheme, a variety of measures were enabled to promote the adoption and growth of hybrid and electric vehicles in India. The first phase of FAME ran for four years, until 2019.

The next iteration (FAME II) has evolved, and ensured key economic incentives for EV manufacturers and consumers, such as concessions on customs duty, reduction of GST, waiver of road tax, etc., to further accelerate EV adoption.

Another important aspect is that India’s progressive EV policy is combined with a policy push on ‘Digital India’ that has enabled new business models to come into being; for example: e-mobility as a service (e-maas) adopted for e-buses in urban India. As with any new technology, the policies, regulations, standards, etc. will need to be tweaked from time to time, and this is happening in the EV ecosystem as well. Evidence now shows the rapidly-growing population of EVs of all types in India.

Key Indicators Of Progress

Over the last three years, more than 500,000 EVs were registered in India, while the government intends to have EV sales penetration of 70 percent for commercial vehicles, 30 percent for private cars, 40 percent for buses, and 80 percent for two and three-wheelers by 2030. This is in line with the goal to achieve net zero carbon emissions by 2070.

It must be borne in mind that EV technology is also evolving, and ‘Green Hydrogen’ shall also play a key role in heavy vehicles becoming EVs. India’s policy approach in the EV domain, while being an early starter, has sufficient flexibility to be aligned with future technologies as well.

e-FAST India (Electric Freight Accelerator for Sustainable Transport), the new platform launched on September 8 by NITI Aayog, shall enable scalable EV adoption in freight transportation

Growth And Improvement

While FAME and FAME II have created a solid framework and e-FAST is expected to be catalyst, one can expect a much higher penetration level of EVs in India. This will need new approaches in several policy areas:

Skilled Human Resources: At one level it is important that the syllabi and laboratory facilities for students and retraining of teachers across the technical education sector are upgraded, and enabled expeditiously. At another level, well-structured reskilling programmes need to be implemented across in the automobile aftermarket domain. Policy formulation and intervention is hence the need of the hour.

The PLI Policy that has been initiated to promote domestic production capabilities of EV components may need further modifications going forward to ensure alignment with technology changes such as battery chemistries, next-gen EV motors and power electronics, etc.

EV Financing is a sector that needs fresh thinking since the resale value of EVs will also be related to the ability to reuse EV batteries as well as their recycling. India requires a new policy on EV financing.

India’s early formulation and rolling out of EV policies has enabled and accelerated the adoption of EVs by citizens for their personal mobility as well as in public transportation in urban India. However, the recent occurrences of EV-related fire incidents served as a wake up call. The authorities and EV manufacturers have reacted quickly to take corrective and preventive measures. New standards and revised safety compliance requirements for battery packs have been announced at the beginning of September. This should ensure minimising or eliminating EV-related fire incidents.

The PLI policies coupled with growing demand have resulted in industrial companies, Indian as well as foreign, investing across India to create robust domestic manufacturing capabilities across the entire EV component sector — battery cells, packs, motors, controllers, etc., whereas the semiconductors still represent a severe constraint as there is no domestic production visibility just yet. (It is, however, encouraging to read the very recent announcements for setting up such semiconductor production in India in the coming years.)

The creation of a robust domestic manufacturing and supply chain of EV components with the right technologies and performance capabilities can enable India to emerge as a global EV component manufacturing hub — as an attractive and competitive alternative to China — and, thus, boost exports from India to various countries. Since there is a worldwide transition to an EV-led ecosystem, the question of how efficiently can India turn its early-mover developments to its advantage is what needs to be answered, and the opportunity presented needs to be capitalised at the earliest.

Mustafa Wajid is Chair of Steering Committee, IET FoMT Panel, and MD, Meher Group. Views are personal, and do not represent the stand of this publication.
Mustafa Wajid is Chair of Steering Committee, IET FoMT Panel, and MD, Meher Group. Views are personal, and do not represent the stand of this publication.
first published: Sep 26, 2022 03:26 pm