The government of India under the dynamic leadership of PM Modi has laid down clear policy guidelines for the promotion and growth of the EV industry.
An independent study by CEEW-Centre for Energy Finance (CEEW-CEF) has estimated the EV market in India to achieve a market size of USD 206 billion by the end of this decade. The study further noted that to meet India’s lofty 2030 ambition of having 70% of all commercial cars, 30% of private cars, 40% of buses and 80% of two-wheelers and three-wheelers in the EV mode would require an estimated investment of USD 180 billion in bolstering vehicle production and a Pan-India charging infrastructure. In its first edition of India Electric Vehicle (EV) Market Overview, India Energy Storage Alliance (IESA) has estimated that the domestic EV market is estimated to clock a CAGR of 36% till 2026. During the same period, the EV battery market in the country is estimated to clock a CAGR of 30%.
Rising fuel prices, stringent emission norms, environmental awareness both at the micro consumer and macro industry level and a firm resolve by governments the world over to combat climate change has put the global spotlight on green mobility. The global onus is on transiting from internal combustion energy (ICE) vehicles powered by fossil fuels to hybrid electric vehicles (HEVs) driven by clean fuels. Emerging economies like India are at the centre of this global mobility shift and will have a decisive role to play in the mass acceptance and adoption of sustainable modes of transport like electric and hybrid vehicles.
The government of India under the dynamic leadership of PM Modi has laid down clear policy guidelines for the promotion and growth of the EV industry. A key example of this was the roll-out of the FAME-1 (Faster Adoption and Manufacturing of Electric Vehicles) scheme with an outlay of Rs 795 crore. The scheme aimed at generating demand for EVs through subsidy provision, creating a dynamic countrywide charging infrastructure and encouraging R&D activities for developing next-gen EV products. The launch of the second phase of the FAME scheme (FAME-2) by the Department of Heavy Industry focused on encouraging OEMs to manufacture EVs. An emphasis on setting up a Pan-India network of charging stations will be pivotal to improving consumer sentiment and promoting the retail demand for plug-in vehicles, especially electric two-wheelers. Similar encouraging pro-sector investor-friendly policy roll-outs by state governments in the country hold the potential to drive scale across the domestic EV value chain.
India has allowed 100% Foreign Direct Investment (FDI) in the EV sector under the automatic route. This coupled with a large consumer base, rising buyer interest and a vast geographical expanse has positioned India as a preferred investment destination and untapped market for global and domestic EV manufacturers. Home-grown startups expanding their operational footprint in the clean mobility space on the back of robust funding are competing fiercely with automotive giants to grab a commanding share of the country’s exponentially growing EV space. Fiscal sops, easy availability of industrial land for setting up EV plants, single-window clearance mechanisms for providing licenses and permits and an investor-friendly regulatory environment will be key to sustain investor interest and attract fund inflows in the EV sector.
The focus of the government should be on encouraging private sector participants and spurring a large number of individual players to set up charging infrastructure across the country. Tax holidays and other fiscal benefits can be offered to companies to boost R&D investment aimed at setting up a vibrant fast charging infrastructure. Older people, students and office-goers should be categorised as a separate section for availing subsidy benefits for the purchase of hybrid vehicles. Subsidies should be provided to the end-customer in the form of direct cash transfer. State-run banks should be urged by governments to offer more loan schemes for buying of EVs.
The EV segment in India is at an inflection point. Investor-friendly and customer-centric policy interventions by the government and positive market sentiments by investors will be key to positioning the Indian EV industry on a high-growth trajectory.
Source: Business World