Government think-tank NITI Aayog this week recommended lowering taxes and interest rates for loans on electric vehicles (EVs). The body has also suggested capping sales of conventional cars, signaling a dramatic shift in policy in one of the world’s fastest-growing auto markets.
The recommendations in a draft report by the National Institution for Transforming India Aayog, headed by Prime Minister Narendra Modi, are aimed at electrifying all vehicles in the country by 2032 and will likely shape a new mobility policy.
“India can become the first country of its size which will run 100 per cent of electric vehicles. We are trying to make this programme self-financed. We don’t need monetary support from the government. We don’t need investment from the people of India,” said Piyush Goyal, Union minister for energy and power, at an event organised by the Confederation of Indian Industries Young India in New Delhi two weeks ago.
India’s plan to leapfrog hybrid technology comes after China announced aggressive measures last year to push sales of plug-in vehicles, including subsidies, research funding and rules designed to discourage fossil fuel cars in big cities. It would also mark a radical response by India as it looks to cut its oil import bill to half by 2030 and reduce emissions as part of its commitment to the Paris climate treaty.
Recent trends
India’s automobile industry is the sixth largest in the world and accounts for 22 per cent of the country’s total manufacturing output. EVs can play an important role in increasing the share of manufacturing in India’s gross domestic product (GDP) from the current 15 per cent to 25 per cent by 2022. Several automotive companies are slowly venturing into the EV space and are expanding their portfolio.
“While there are electric cars, electric bikes and e-rickshaws plying on Indian roads, the lack of infrastructure and the high initial costs are major challenges,” Pawan Munjal, managing director and chief executive officer of Hero MotoCorp, told Reuters.
With BMW-i8 electric car, Volvo T8 plug in car and Mahindra eVerito and e20 already present in the market, the Indian market is already witnessing a growth in the number of electric cars.
In an attempt to encourage more manufacturers to make EVs, the government is exploring a strategy to task a company with buying EVs in bulk and then leasing them to companies such as taxi aggregators, in an attempt to bring down the cost of such vehicles.
Rationale behind the move
The move isn’t just environmental posturing but an economic protectionist posturing. India is a country rich in natural resources. It has been a centre for spices and textile for centuries, but it must import oil. For petroleum, India has to rely on other countries and foreign businesses. Pollution is a problem, especially in a country like India with cities of 20 million people. Not just air pollution, electric cars will also reduce noise pollution which is increasing at an alarming rate especially in metro cities.
Down the line
India’s potential to create a new mobility paradigm with electric cars could have a significant impact domestically and globally. High battery costs, lack of charging stations and other infrastructure means could make the car makers hesitant of investing in the technology. Furthermore, it is not feasible to take an EV for a long-distance journey due to lack of sufficient charging stations; also, some EVs are not as fast as conventional fuel-powered vehicles.
Research for developing quick-charging batteries is going on globally. In India, the number of charging stations is increasing slowly. Now, if more and more people shift towards buying EVs, then there is a high probability of power distribution companies setting up charging ports on highways, with all such ports connected to the electricity grid. This again will facilitate quicker charging and people will look at buying an EV, as a viable option.
The good news is that automobile companies are trying to find ways for making EVs an affordable and convenient option for the common man. However, with all these promising signs, the challenges still remain intact. Electric vehicle technology is exciting, but a commitment to total adoption by 2030 would be a huge gamble.
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