Developing India’s EV Market: Growth Projections And Government Policy

India's EV Market Development: Growth Forecasts and Government Strategy Projections

The federal think tank Niti Aayog’s research titled "India's Electric Mobility Transformation" predicts EV market penetration in India will reach 70% for commercial automobiles, 30% for private cars, 40% for buses, and 80% for two- and three-wheelers by 2030.

If achieved, these aims might result in a net reduction of 14 exajoules of energy and 846 million tonnes of CO2 emissions throughout the lifetime of the deployed cars. Electric vehicles sold between now and 2030 can save a total of 474 million tonnes of oil equivalent over the course of their lifetime, which is valued at $207.33 billion.

As mandated by the Nationally Determined Contributions (NDCs) of the United Nations Framework Convention on Climate Change (UNFCCC) and EV30@30, this will assist India meet its worldwide commitments to reduce carbon emissions and increase the use of cleaner energy and transportation sources.

Policy actions

Government policy: A number of fiscal and non-fiscal measures have been implemented to assist the adoption of electric transportation. They are listed below:

Plan 2020 for the National Electric Mobility Mission: It was introduced in 2013 by the Department of Heavy Industry (DHI) as a road map for accelerating the production and acceptance of electric vehicles (EVs) in India.

FAME Phase I: The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India (FAME India) Scheme was notified in April 2015 as part of the NEMMP 2020 to stimulate the manufacturing of electric and hybrid vehicle technology. It has concentrated mostly on four aspects: demand creation, technological platform, pilot programmes, and pricing infrastructure. The majority of demand creation incentives have taken the form of reduced purchasing prices.

FAME Phase II: This programme will be launched in 2019 for a duration of three years, with a budget of $1.36 billion to be utilised for upfront incentives on the purchase of EVs and to promote the construction of charging infrastructure. FICCI has requested the extension of FAME II through 2025, in addition to short-term demand-boosting incentives. This second phase focuses on promoting the electrification of public and shared transportation and seeks to subsidise around 7,000 e-buses, 5,00,000 e-three-wheelers, 55,000 e-four-wheeler passenger vehicles, and one million e-two-wheelers. Additionally, the development of charging infrastructure is promoted.

Amendments to FAME Phase II: On 11 June 2021, the Ministry of Heavy Industry announced additional amendments to the FAME II programme in an effort to increase customer demand for electric vehicles. Under the amended policy, the battery-linked subsidy per Indian-made electric two-wheeler has raised to INR 15,000 per Kilowatt-hour (KWh) from INR 10,000 per KWh.

In addition, makers of electric two-wheelers can now provide discounts of up to 40 percent, a major increase from the previous limit of 20 percent. For these electric two-wheelers to qualify for subsidies under the FAME II programme, they must have a minimum range of 80 kilometres per single charge and a minimum top speed of 40 kilometres per hour. These incentives are anticipated to substantially reduce the buying price and boost buyer sentiment, hence stimulating market demand.

The modifications to the legislation have been applauded by industry stakeholders, who now anticipate that sales of electric two-wheelers will exceed six million units by 2025. Yet, according to a recent CRISIL assessment, 95 percent of India's e-scooters are ineligible for the FAME II incentive programme since they do not match the eligibility requirements.

Ministry of Energy: It has clarified that charging electric vehicles is considered a service, meaning that operating EV charging stations does not require a licence. It has also created a policy about charging infrastructure to expedite the deployment of electric vehicles.

The new unified Guidelines and Standards for Electric Vehicle Charging Infrastructure were published on January 14, 2022. These comprehensive standards include provisions for a) electric vehicle (EV) owners and b) public charging station (PCS) infrastructure. It addresses, among other problems, land use and access, electricity tariffs, state and federal government duties, and timetables for providing connectivity for PCS installation.

It has been declared by the Ministry of Road Transport and Highways that both commercial and private battery-powered vehicles would be awarded green licence plates.

It has also advised that all battery-powered, ethanol-powered, and methanol-powered transport vehicles will be excluded from the necessity for a business authorisation.

Niti Aayog: The cabinet has authorised the National Mission on Transformative Mobility and Battery Storage, and the CEO of Niti Aayog will lead the Mission's inter-ministerial steering group.

The Mission intends to establish a Phased Manufacturing Program (PMP) for five years, from 2019 to 2024, to facilitate the establishment of large-scale, export-competitive integrated batteries and cell-manufacturing giga plants in India, as well as the localisation of production across the entire electric vehicle value chain.

The think tank produced a proposed battery switching policy on April 20, 2022, and encouraged key parties to provide feedback by June 5, 2022. The proposed policy, which will be in effect until March 31, 2025 from the date of its notification, is tailored for two- and three-wheeler battery swapping systems.

State policy: Over 27 states and territories have developed mobility transformation strategies to provide their inhabitants with safe, inclusive, affordable, and environmentally friendly transportation options.

While certain states, such as Karnataka and Tamil Nadu, got a head start because of preplanned public policies, targeted investor incentives, and support infrastructure, other governments have also created policies to encourage market demand and build infrastructure.

Check below some updates on policy for the different states and updates so far:

Maharashtra : (Published in July of 2021. Valid till March 31, 2025)

• A budget expenditure of INR 9.3 billion ($124.97 million)
• By 2025, achieve a 10 percent EV proportion of all new car registrations.
• By 2025, achieve a 25 percent electrification rate for public transit and last-mile delivery vehicles in Greater Mumbai, Pune, Nashik, Nagpur, and Aurangabad.
• Multiple purchasing incentives for all categories of electric vehicles, including e-buses.
• Incentive programmes for battery recycling.
• Establish at least one Gigafactory in the state for the production of Advanced Chemistry Cell (ACC) batteries.
• Establish charging infrastructure and connecting highways throughout the state. Provide incentives for installing charging stations.
  

Odisha : Released in August of 2021. Functioning for five years

• 20 percent of all new car registrations in the state must be EVs by 2025. Two-wheelers, three-wheelers, four-wheelers, and electric buses are the segments of interest.
• Waivers of road tax and registration expenses during the duration of the coverage.
• Incentives for the production of EVs and their components, notably batteries.
• Additional incentives for public and private charging infrastructure development.
• Additional procedures for the production of Lithium Ion batteries.
  

Assam: Released in September of 2021. Valid for a period of five years.

• Achieve a 25 percent penetration of electric vehicles in Assam's total vehicle registrations.
• Encourage the deployment of 200,000 EVs within the next five years. This objective is segmented as follows:
• Two-wheeler EVs – 100,000 units;
• Three-wheeler EVs – 75,000 units; and
• Four-wheeler EVs – 25,000 units
• Offer incentives for the production of EVs and their components.
• Focus on battery recycling policies.
  

Gujarat: Published in June of 2021. Valid till 2025.

• Expenditures amounting to INR 8.7 billion (US$116.90 million).
• Encourage the deployment of 2,000,000 EVs within the next four years. The segmentation of this objective is as follows:
• Two-wheelers EVs– 1,10,000 units
• Three-wheelers EVs – 70,000 units
• Four-wheelers EVs– 20,000 units
• Up to INR 10,000 (US$134.40) per kwh will be available as incentives for EVs based on battery capacity.
• All EVs will not be required to pay registration fees.
• State-level policy incentives for expanding the charging infrastructure.
  

Rajasthan: Released on July 2021 Valid until 31 March 2022.

• Before March 2022, all EVs purchased will be eligible for a State Goods and Services Tax (SGST) refund.
• Additional purchasing incentive for two- and three-wheeled electric vehicles.
  

West Bengal: Date of issue: June 3, 2021 Five years from the date of notification.

• During the timeframe of policy execution, the state aims to reach one million EVs in all segments.
• In the next five years, one hundred thousand public and semi-public charging stations will be installed.
• Achieve an eight-to-one ratio of EV charge points to public charge points.
• Reusing and recycling old batteries, as well as disposing of unwanted batteries in an eco-friendly manner.
• Establishment of a "EV Accelerator Cell" will facilitate the public charging infrastructure for EVs via DISCOMs.
  

Meghalaya: Published in March of 2021. Valid for five years from the date of notification.

• Offering incentives to encourage the adoption of at least 15 percent EVs in the state within the next five years.
• Facilitate the adoption of 20,000 EVs during the term of policy implementation.
• All types of EVs purchased during the policy period will not be required to pay registration fees or road tax.
• Purchase subsidy of INR 10,000 (US$134.40)/kwh for the first 3,500 electric two-wheelers with prices less than INR 150,000 (US$2016.06).
• Purchase subsidies of INR 4,000 (US$53.76)/kwh for the first 200 electric three-wheelers priced at less than INR 500,000 (US$6720.20).
• Purchase subsidy of INR4,000 (US$53.76) per kwh for the first thirty hybrid four-wheelers priced at less than INR1.5 million (US$20,160).
• Boost infrastructure for charging by promoting private investment.
• Encourage battery recycling and reuse.
  

Andhra Pradesh: One million electric vehicles by 2024.

• One hundred thousand slow and rapid EV charging stations by 2024.
• The government intends to prohibit the registration of gasoline and diesel vehicles in the future capital city of Amaravati by 2024.
• By 2024, all government vehicles, including businesses, boards, and ambulances, will be electric.
  

NCT of Delhi: Aims to buy at least 50 percent of all new stage carriage buses for the city fleet as e-buses by 2020, beginning with 1,000 e-buses.

• Aims to have 25% of newly registered vehicles be electric by 2024.
• A two-wheeler purchase incentive of INR 5,000 (US$68) per kWh of battery capacity, with a maximum incentive of INR 30,000 (US$409) per vehicle.
• Encouragement for the destruction and deregistration of outdated, extremely polluting two-wheelers.
• A purchase incentive of INR 10,000 (US$136) per kWh of battery capacity is granted for electric four-wheelers (cars) (with a maximum incentive of INR 150,000 (US$2,039) per vehicle) for the first 1,000 e-cars registered in New Delhi after the policy's issuance.
• Owners of e-cars, e-rickshaws, and e-carts will receive an INR 30,000 ($409) purchase bonus per vehicle.

Karnataka

• By 2030, all freight-hauling three- and four-wheel vehicles will be required to be electric.
• Local public transportation bus fleets will add 1,000 electric vehicles.
• In Bengaluru, 112 EV charging stations will be installed.
• Focus on venture capital funds for e-mobility startups and the development of a secondary battery industry.
• Incentives such as interest-free loans on nett SGST for businesses who manufacture EVs.
  

Kerala

• One million EVs in the state by 2022, and 6,000 e-buses for public transportation by 2025.
• Funding for e-buses and the government fleet's viability gap.
• Incentives such as tax reductions, exemptions from road taxes, exemptions from toll charges, free permits for fleet drivers, and free parking.
• Priority to the production of EV components.
  

Telangana:

• 100 percent exemption of road tax and registration charge for initial purchases of electric vehicles.
• 80 percent of two- and three-wheelers (motorcycles, scooters, auto-rickshaws), 70 percent of commercial automobiles (ride-hailing businesses such as Ola and Uber), 40 percent of buses, 30 percent of private cars, and 15 percent of all vehicles will be electrified by 2025, according to the EV sales target.
• EVs in shared mobility, EV production, and charging infrastructure development will create 20,000 jobs by 2025.
  

Uttar Pradesh:

• Introducing 1 million EVs across all segments by 2024.
• Aim to deploy 1,000 electric buses in the state by 2030.
• Aim to electrify 70 percent of public transportation on recognised green routes in 10 identified EV cities by 2030. (Noida, Ghaziabad, Meerut, Mathura, Agra, Kanpur, Lucknow, Allahabad, Gorakhpur, and Varanasi).
• By 2024, there will be around 0.2 million slow and fast charging and exchanging stations.
• Establishes a single-window system for all essential EV and battery production unit approvals.
  

Madhya Pradesh:

• Rapid EV adoption and contribution of 25% of all newly registered public transportation vehicles by 2026.
• Certain cities will prohibit the registration of new internal combustion engine (ICE) vehicles.
• Enable accelerated adoption by enabling a safe, cost-effective, and accessible charging infrastructure.
• Incentives for shared e-rickshaws and electric auto-rickshaws: free cost of permits, exemption/reimbursement of road tax/vehicle registration fees for five years, and a five-year waiver of parking charges at any municipal corporation-operated parking facility.
  

Tamil Nadu:

• Electrify 5% of buses year by 2030, as well as shared mobility fleets, institutional vehicles, and e-commerce delivery and logistics trucks.
• Within ten years, convert all auto rickshaws in six major cities to electric vehicles.
• Establish venture financing and business incubation service hubs to promote the development of electric vehicle startups.
• Until 2025, electric vehicle-related and charging infrastructure manufacturing facilities will be exempt from paying any electricity tax.
  

Uttarakhand:

• Aims to electrify 100 percent of public transport, including e-buses, shared mobility, including e-bikes, and goods transport employing electric two-, three-, and four-wheelers and other micro goods transport vehicles in five target cities by 2030.
• Absolute exemption from power duty and stage carriage permit fees for five years from the date of commercial production.
• Exempts the first 100,000 buyers of electric vehicles from the motor vehicle tax for five years.
  

Bihar:

• Rickshaw electrification should take precedence. Aim to convert all manual rickshaws to electric rickshaws by 2022.
• Promotion of the production of e-rickshaws.
• Install fast-charging stations every 50 kilometres along state and national highways, as well as charging stations in business and residential areas.
  

Himachal Pradesh:

• Aims for 100 percent electric vehicle adoption by 2030.
• Draft encourages the development of a specialised charging infrastructure and contains a provision for charging stations in commercial structures.
  

As the electric vehicle market is growing, do you think, with all the policies, the electric future is near to us?