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Electric Vehicles(EVs)Policies of India

Posted on June 1, 2022 by admin1  199

In Context 

The EV policies put in place by some States as part of FAME-II have been instrumental in driving this growth.

What are Electric Vehicles?

  • They operate on an electric motor, instead of an internal-combustion engine that generates power by burning a mix of fuel and gases. 
  • Therefore, such a vehicle is seen as a possible replacement for current-generation automobiles, in order to address the issue of rising pollution, global warming, depleting natural resources, etc. 

Indian Policies on EVs

  • The government introduced a slew of measures in line with the ‘Make in India’ campaign to incentivise manufacturers to produce components locally and build a structured policy framework as India is heavily dependent on China for lithium supply chains constraining the widespread deployment of EVs.
  • In 2010, the Ministry of New and Renewable Energy (MNRE), announced a financial incentive for manufacturers for EVs sold in India.
    • The Rs 95-crore scheme envisaged incentives of up to 20 per cent on ex-factory prices of vehicles, subject to a maximum limit.
    • It was the first concrete decision to incentivise EVs. However, it was withdrawn by the MNRE in March 2012.
  • In 2013, India unveiled the National Electric Mobility Mission Plan (NEMMP) 2020.
    • It aimed to make a major shift to EVs and to address the issues of national energy security, vehicular pollution and growth of domestic manufacturing capabilities.
    • It offered subsidies and created a supporting infrastructure for e-vehicles but the plan has not been implemented.
  • In the Union Budget 2015-16, the ‘Faster Adoption and Manufacturing of EVs’ (FAME) scheme was announced, with an initial outlay of Rs. 75 crore.
    • It aimed to offer incentives for clean-fuel technology cars to boost their sales to up to 7 million vehicles by 2020.
  • In 2017, the Transport Ministry highlighted its intent to move to 100 per cent electric cars by 2030.
    • However, the automobile industry raised concerns over the execution of such a plan, so the government subsequently diluted the plan to 30 per cent.
  • In February 2019, the Union Cabinet cleared an Rs. 10,000-crore programme under the FAME-II scheme for promotion of Electric Mobility in the country.
    • Objective
      • To encourage faster adoption of electric and hybrid vehicles by offering upfront incentives on the purchase of EVs.
      • Also by establishing the necessary charging infrastructure for EVs.
      • The scheme will help in addressing the issue of environmental pollution and fuel security.
  • Initially envisioned for three years, FAME-II got a two-year extension in June 2021 owing to a number of factors including the pandemic.
  •  It aims to support 10 lakh e-two-wheelers, 5 lakh e-three-wheelers, 55,000 e-four-wheeler passenger cars and 7,000 e-buses. 
  • In the 2022 budget, a battery swapping policy was announced as an easier way to charge EVs. 
    •  The battery swapping model for supplying power has side-stepped the lack of charging infrastructure but the future is likely to see a mix of both models.
  • The government also announced a Production Linked Incentive scheme for automakers, a part of which aims to boost electric vehicles manufacturing.

Data Analysis 

  • Three-wheeler EVs like e-autos and e-rickshaws account for close to 65% of all EVs registered in India.
  •  In contrast, two-wheeler EVs come at a distant second with over 30% of registrations and passenger four-wheeler EVs at a meagre 2.5%. 
  • Under the targets for FAME-II, e-three-wheelers have crossed over 4 lakh vehicles of the 5-lakh target since 2019.
    • At the current rate, e-three-wheelers are expected to breach the 5-lakh target by 2023. 
  • The EV registrations data show that Assam, Bihar, Delhi, Uttar Pradesh and West Bengal account for close to 80% of all e-three-wheeler registrations, with U.P. accounting for close to 40% of all registrations. .
    • The focus of the EV policies of these five States is on accelerating adoption of EVs among consumers and promoting local manufacturing. 
  • The success India has experienced in the e-three-wheeler space has come from developing both the demand and supply sides. 
    • Subsidies, tax exemptions, and interest-free loans have successfully rallied demand for these vehicles. 
    • These vehicles provide for inexpensive means of transport for millions, are easy to maintain, and have relatively low operating costs, making them immensely popular among operators. 
    • The indigenous design allows for easy local manufacturing in workshops and small enterprises and makes them relatively easy to charge and maintain compared to their two-wheeler and four-wheeler counterparts. 

Challenges /Issues 

  • India’s road to a fully-electric ecosystem still has a few hurdles – High cost, inadequate infrastructure, lack of high performing EVs .
  •  Local manufacturing enterprises lack the necessary resources or the motivation to invest in design developments.
  • The absence of a robust manufacturing ecosystem for the materials associated with the EV revolution, coupled with the concentration of the supply chain in certain regions.
  • Li-ion batteries are complex devices requiring a level of sophistication that can take years to perfect. 
  • Hurrying the development of this complex technology without careful safeguards can lead to increasing safety incidents, as evidenced recently on Indian roads.
  • The success in the e-three-wheeler space has been difficult to replicate in the e-two-wheeler and e-four-wheeler space, which have problems both on the demand and supply side. 

Way Forward 

  • The current policies in place at the State level have spurred an e-three-wheeler dominance but it has come at some costs therefore subsequent EV policies must pay special attention to adequate passenger safety. 
    • Future policies must therefore incorporate appropriate design and passenger safety standards. 
  • Future EV policies must take into account the existing and emerging stakeholders on the demand and supply sides for effective implementation.
  • With the prevailing trajectory of EVs, India must take lessons from its e-three-wheeler success story to sustain its EV ambitions.

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