Empowering Electric Vehicles & Hybrid Mobility in India

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Electric Vehicles & Hybrid Mobility

The demand for electric vehicles (EVs) in India has experienced significant growth over the last five years. However, there is still a considerable journey ahead for the industry to achieve parity with Internal Combustion Engine (ICE) vehicles. The Committee’s foremost recommendation is for the Government to actively foster India as a global manufacturing hub for electric vehicles. This can be achieved through a combination of policy support and the creation of a conducive and comprehensive EV ecosystem, ultimately instilling confidence in consumers to opt for EVs. The Committee underscores the pivotal role the Government must play as a catalyst in facilitating the rapid adoption of Electric Mobility through subsidies, incentives, and the formulation of long-term, sustainable policies to stimulate demand.

Observations and Analysis of the report:

National Policy: 

  • The Committee’s observations reveal that 13 Indian states have already notified dedicated EV policies, while 12 more are in the process of drafting their policies.
  • These policies predominantly emphasize demand and supply side incentives to reduce the total cost of vehicle ownership and encourage local manufacturing.
  • The Committee recommends the central government to harmonize these policies at both the central and state levels, culminating in a unified national-level policy to promote EV adoption across the country.
Going electric on plans to switch to electric vehicles

FAME India: 

  • The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India Scheme (FAME) was initiated in April 2015 with the goal of nurturing the market and manufacturing ecosystem for electric and hybrid vehicles.
  • The second phase of this scheme, which began in April 2019, allocates a budget of Rs 10,000 crore over three years.
  • It aims to support the purchase of 7,090 electric buses, 55,000 four-wheeler passenger cars, five lakh three-wheelers, and ten lakh electric four-wheelers.
  • However, the Committee observes that the FAME scheme currently focuses primarily on subsidizing the purchase of EVs and charging infrastructure.
  • To widen its scope, the Committee recommends including funding and incentives for:
    • research and development of EV components and charging infrastructure,
    • local manufacturing of EV components, and
    • extending incentives to the purchase of four-wheeler EVs.

Battery Manufacturing: 

  • Lithium-ion batteries are the most commonly used batteries in EVs. India, however, relies heavily on the international market for these batteries as it does not manufacture them domestically.
  • In response, a Production Linked Incentive (PLI) scheme was launched in May 2021 to incentivize the manufacturing of Advanced Chemistry Cells (ACC) in India.
  • ACCs are battery cells with advanced storage technologies capable of storing electric energy as chemical energy and converting it back when needed.
  • The Committee acknowledges that the current threshold for eligibility under this scheme is quite high, requiring production units with a capacity of at least five GWh.
  • To rectify this, the Committee recommends revising the eligibility criteria to include Indian manufacturers and scaling up local manufacturing to reduce the cost of EV batteries.
  • Furthermore, the Committee suggests forming a consortium with international countries for collaborative research, investment pooling, battery technology development, and battery recycling.
  • Additionally, the Committee notes that India lags in research and development spending, devoting less than one percent of its budget, whereas major economies allocate around five to six percent for the same purpose.
  • Therefore, the Committee advocates for increased government investment in research and development to boost indigenous manufacturing and reduce dependence on imports.

Charging Infrastructure: 

The second phase of the FAME India scheme has sanctioned 2,877 charging stations in 68 cities, as noted by the Ministry of Heavy Industries. However, the Committee highlights that the existing number of charging stations remains negligible and is concentrated mainly in select cities.

To address this issue, the Committee recommends:

  1. The establishment of a dense and robust fast charging infrastructure throughout the country,
  2. The provision of charging facilities in showrooms and service stations of vehicle manufacturers,
  3. The creation of universal and uniform charging provisions at all charging stations,
  4. The development of a live database of active charging stations, and
  5. Categorizing the expenditure on setting up charging stations under Corporate Social Responsibility for two to three years. Additionally, the Committee advises implementing a separate metering system for billing public charging points at subsidized rates.
Two and three-wheelers are driving India's electric revolution

Financing: 

  • The Committee acknowledges that to encourage local manufacturing, import duties on components not manufactured locally have been increased from 5% to 15%. Moreover, it notes that EVs are taxed at 5% GST, whereas hybrid EVs, which incorporate both an internal combustion engine and an electric component, are taxed at 43% (28% GST plus 15% Cess).
  • In light of these findings, the Committee recommends a phased increase in import duties until components are manufactured locally and a reduction in the GST on hybrid EVs.
  • Furthermore, the Committee suggests designating EVs as a priority lending sector, making it easier to obtain loans for EV procurement and component purchase.

Conclusion

  • The Committee’s report provides a comprehensive analysis of the electric vehicle and hybrid mobility landscape in India.
  • By implementing these recommendations, the government can actively foster the growth of EVs and strengthen the country’s position in the global electric vehicle market.
  • These policies and initiatives are crucial for promoting sustainability, reducing emissions, and shaping the future of transportation in India.

FAQ’s

What is hybrid electric vehicles in India?

Hybrid electric vehicles in India are automobiles that combine two sources of power for propulsion: an internal combustion engine (typically gasoline) and an electric motor. These vehicles are designed to enhance fuel efficiency and reduce emissions by switching between the two power sources based on driving conditions. In India, hybrid electric vehicles are gaining popularity as a more eco-friendly and economical alternative to traditional gasoline-powered cars, contributing to a greener and more sustainable transportation sector.

What is hybrid vs EV India?

Hybrid vehicles in India combine both an internal combustion engine and an electric motor for propulsion, offering improved fuel efficiency. Electric vehicles (EVs) are fully electric and produce zero tailpipe emissions, relying solely on electricity for power. While hybrids provide a transition, EVs offer a fully eco-friendly solution for sustainable mobility in India.

What is electric vehicle mobility?

Electro mobility, often referred to as e-Mobility, embodies the idea of harnessing electric powertrain innovations, in-vehicle data systems, and interconnected infrastructure to facilitate the electric propulsion of individual vehicles and entire fleets.

What is the difference between electric vehicle and hybrid electric vehicle?

The main difference between a hybrid and an electric vehicle is how each is powered; a hybrid switches seamlessly between electric energy and a blend of petrol and electric power, whereas an electric vehicle runs on battery power alone.