Electric vehicles (EVs) in India can be an environment friendly and sustainable solution for increasing transportation demand. India can emerge as a manufacturing hub for electric vehicles (EVs) which will create employment opportunities and help economy to grow.
Let's discuss:
Why are electric vehicles needed in India?
Electric Vehicles can help to solve the problem of transport sector and particularly road transport in India because:
a) In India, the transport sector stands 2nd to the industrial sector in terms of its contribution to the CO2 emissions.
b) According to the data provided by Ministry of Environment, Forest and Climate Change (MOEF&CC) in 2018, the road transport accounts for around 90% of the total emissions in the transport sector in India.
The usage of electric vehicles can help to curb the pollution in the cities and decrease imports of crude oil.
How to cope up with the increasing demand for vehicle ownership?
The demand for vehicle ownership is increasing day by day which results in higher demand for fossil fuels. To meet the increasing demand of fossil fuels, India has to depend on imports of crude oil from the other countries which ultimately leads to increase in current account deficit (CAD).
Thus, to keep the balance sheet of the economy healthy and simultaneously meet the increasing demand of vehicle ownership in an environment friendly and sustainable manner, India need to focus on finding an alternative for fossil fuels such as electric mobility.
Steps taken by government to balance the demand of vehicle ownership
With the increase in population, the demand for vehicle ownership is also increasing which leads to increase in the purchase of personal vehicles such as motorcycles and cars. The increased number of vehicles on the road leads to increase in congestion on the roads and pollution. Thus, to balance the demand of vehicle ownership following steps need to be taken by the government:
1) Government need to invest in public transport sector and provide cheap and quality alternative to public for transportation such as:
- Introduction of metro projects in cities to reduce congestion from roads and decrease vehicular emissions,
- Purchase electric buses and promote and its usage.
2) Encourage people to use public transport such as e-rickshaw, electric buses and metros rather using personal vehicles.
3) Encourage car pooling,
4) Promote usage of electric vehicles such as e-rickshaw, electric cars etc.
NITI Ayog's proposal: Fully convert ICEs to Electric Vehicles
NITI Ayog has proposed targets to fully convert the internal combustion engines (ICEs) into Electric Vehicles:
a) For 3-wheeler by 2023
b) For 2-wheeler having engine less than or equal to 150 cc by 2025
Advantages of using electric vehicles
The advantages of using electric vehicles are:
- Decrease in vehicular pollution
- Decrease in respiratory diseases due to pollution such as asthma
- Decreases dependence on fossil fuels (petrol, diesel)
- Decreases imports of petroleum product thereby saving exchequer money
Challenges for electric mobility
The challenges faced on adopting electric mobility widely are:
1) Adequate charging and battery infrastructure needs to be made available.
a) Fast charger,
b) Easily available public chargers or charging points
2) Need to reduce the manufacturing cost of Electric Vehicles.
3) Need to reduce upfront cost of buying EVs.
4) Need to reduce maintenance cost of EVs.
5) Decrease custom duty on import of EVs and batteries.
Way Forward for electric mobility
The way forward for wide adoption of electric vehicles (EVs) in India are:
1) Incentives:
Government need to provide incentives to encourage people to buy EVs and decrease lifetime ownership cost of EVs.
2) Import duties:
The custom duty implied on the import of EVs is very high (almost 100%) which discourages the global companies to launch their products in Indian market. Thus, government need to decrease the import duties on electric vehicles and batteries.
3) Charging and battery infrastructure:
- Investment need to be made in charging and battery infrastructure
a) Universal Charging standards for the country
Government need to come up with a policy to have nationwide universal charging standards as fast chargers take about 30mins to fully charger the EV while slow charger may take up to 8 hours to charge the EV.
b) Public chargers
The information about the availability of nearby public chargers need to be provided to the users of EV through maps or other means. This will ease the use of EVs and promote wider adoption by the public.
c) Battery manufacturing plants:
Presently, battery which is the main component of EVs is not fully manufactured in India. Thus, we need to rely on imports which increase the selling cost of EVs. Hence, Lithium-ion battery manufacturing plants need to be setup in India.
d) Promote Research and Development
- Develop fast chargers
- Develop Lithium-ion storage batteries which can work efficiently in the high temperature conditions of India
Initiatives taken by government to promote Electric Vehicles in India
Various initiatives have been taken by the Central government to encourage the use of electric vehicles in India such as:
1) Availability of Charging infrastructure
The major obstacle in adoption EVs in India is the limited availability of charging infrastructure. Thus, Government is developing charging stations across country covering: capital cities of all states, 7 metro stations, satellite towns connected to the metros etc.
2) Tax reduction
- Government has decreased GST by 7% for EVs.
- Government is providing tax rebate on manufacturing battery technologies.
- Indirect tax benefits and investment linked income tax exemptions under Section 35 AD of the Income Tax Act will be provided to the makers of components such as: lithium-ion storage batteries and solar electric charging infrastructure.
3) Custom duty
The lithium-ion batteries for EVs are imported as there are no manufacturing units present in India. The import duty on lithium-ion battery was very high (almost 100%). Thus, to give a boost to Electric Vehicles in India, the government has decreased the custom duty on imports of lithium-ion battery.
The cuts in import duties on EVs will help to encourage global companies, who have the required technology and support, to launch their EV products in Indian market.
4) Incentives to encourage people to buy EVs:
- Government has provided for free registration of EVs.
- Government is providing income tax rebate of upto Rs.1.5 lakhs to customers on interest paid on loans to buy electric vehicles with a total exemption benefit of ₹2.5 lakh over the entire loan period.
5) Manufacturing Hub for Electric Vehicles
Schemes launched by the government to make India a manufacturing hub for EVs in the world are:
a) National Electric Mobility Mission Plan 2020 (NEMMP)
NEMMP aims to make India a manufacturing hub for electric vehicles with the objective to achieve sales of 60-70 lakh units of total EVs by 2020.
b) Faster Adoption and Manufacturing of Electric vehicles (FAME) India scheme
FAME India scheme was launched by Government of India in 2015 to achieve the objectives of NEMMP 2020. FAME scheme aims to promote manufacturing of electric and hybrid vehicles.
Phase-1 of FAME was launched on 1st April, 2015 and was completed by 31st March, 2019. Phase-1 of FAME had four focus areas:
a) Demand Creation
b) Technology Platform
c) Pilot Project
d) Charging Infrastructure
Phase-2 of FAME has been launched on 1st April, 2019 with an outlay of 10,000 Crore and it aims at electrification of public transportation.
State Governments initiatives
According to NITI Ayog, various states are taking steps to promote use of Electric Vehicles in the state such as:
1) Kerala:
Kerala has set a target of 10 lakh EVs by 2022
2) Andhra Pradesh:
Andhra Pradesh has set a target of 10 lakh EVs by 2024
3) Maharashtra:
Maharashtra has drafted a EV Policy, 2018 to increase the number of registered EVs in the state to 5 lakh.
4) Telangana:
Targets 100% usage of electric buses for intracity, intercity and interstate transport for its state transport corporation.
5) Uttarakhand
The EV policy of Uttarakhand focuses on the manufacturing of EVs in the state and thus provides incentives to the manufacturers of EVs in the MSME sector.
Lessons to learn from Norway, China and Japan in adopting EVs
1) Norway
Norway government is providing incentives to the buyers and users of electric vehicles and disincentives to the users of conventional vehicles. The incentives provided by the government of Norway to promote electric vehicles in the country are:
a) free parking
b) waiver of toll and ferry fees,
c) exemption from VAT,
d) tax incentives on import and purchase of EVs,
2) China
a) New Energy Vehicle (NEV) credit mandate
Chinese government has issued a new energy vehicle (NEV) credit mandate which sets the minimum requirement for the production of new energy vehicles (PHEVs,
BEVs and FCEVs), with some flexibility offered through a credit trading mechanism in the car industry.
Every manufacturer is required to earn minimum NEV credits either through producing or importing NEVs or through the purchase of NEV credits from other manufacturers who have excess credits.
b) Subsidy
Chinese government has provided subsidy specifically in the area of charging and battery infrastructure which has helped increase its market share in EVs.
c) Charging infrastructure
Adequate charging stations are made available throughout the road networks.
Is automobile sector adopting EVs?
The automobile sector has also started investing on the manufacturing and sale of Electric Vehicles in India along with the setting up of battery manufacturing plants.
Examples:
1) In July 2019, Hyundai has launched its electric SUV named Kona having on-road price of Rs.30 lakhs. To attract the people to buy its SUV, Kona has a mileage of 452kms per charge.
2) Audi will launch its 4-wheeler e-Tron
3) MG Motor India will launch its 4-wheeler eZs
4) Mahindra has setup a battery manufacturing plant in Maharashtra with South Korea's LG Chen.
5) Tesla wants to setup a battery manufacturing unit in India in partnership with its Chinese counterpart Contemporary Amperex Technology Co Ltd.
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