Further exhibiting its commitment to transition India from a fossil fuel-based economy to one centred on green tech, the Union Cabinet, on Wednesday, approved a revised production-linked incentive scheme to the tune of Rs 25.938 crore aimed directly at India’s automotive sector. Announcing the scheme, Union minister Anurag Thakur added that the scheme for the auto industry is expected to lead to a fresh investment of over Rs 42,500 crore, incremental production worth over Rs 2.3 lakh crore, and create more than 7.5 lakh jobs.
The latest revelation is yet another positive development in India’s EV journey which until 2017 appeared to be littered with unaddressed issues. Questions over whether electrification could really take place on India’s roads stemmed primarily from concerns over inadequate charging infrastructure, poor variety of EVs in the market, their higher prices, and technological uncertainties.
However, in the last two years, significant progress has been made towards removing these barriers. The number of electric vehicles capable of travelling for distances comparable to their ICE counterparts has increased remarkably while major cities have seen an uptick in the number of charging points installed.
The existing FAME II subsidies of up to 3 lakhs for EVs in commercial use, a reduction in the GST rate to 5 per cent and road tax and registration waivers across several states have also driven down the prices of these vehicles. Those currently in the market are now, reportedly, just between 20 to 30 per cent more expensive than a comparable ICE vehicle – a price differential that is made up within a few years of the vehicle’s use due to lower maintenance and running costs.
The government has also declared its intention to install, at least, a single charging station across 60,000 petrol pumps in the country. The Department of Heavy Industry has also earmarked Rs 1,000 crore towards the development of charging infrastructure within the country. Tata Power, in fact, already has 180 operation charging stations in 20 cities and is expected to ramp this up to 700 by March next year.
OEMs are also providing installation of charging points at consumers’ homes – a solution that is likely to assuage the concerns of prospective EV buyers. According to a Kenneth Research study, the market for EV infrastructure in India is projected to grow at a staggering 40 per cent compound annual growth rate between 2019 and 2025.
2021 is also likely to see a slew of new EV launches further expanding the affordable options available to consumers. A brief look back into the history of EV car sales in India may temper expectations with under 8,000 units sold over the last six years. However, it is important to note that 2,955 units sold in FY21 represented a 128 per cent rise from the previous year (when 1,295 units flew off the shelves).
The Indian government has outlined its ambitions to replace 30 per cent of its automobile fleet with electric vehicles within the next decade. The concerted efforts being made towards this cause are, indeed, only likely to inspire hope among EV manufacturers. If India is serious about delivering on its pledge to reduce carbon emissions by 30 to 35 per cent over the next decade while reducing its reliance on crude oil imports, bolstering the EV industry will be critical.
