Reasons To Invest

Indian e-two-wheeler market would hit 4.5 mn-5 mn by 2025, accounting for 25%-30% of the total market, and nine mn by 2030.
Electric 3-wheelers likely to account for 30% of new sales by 2025
Production linked incentive schemes (Auto and Advanced Chemistry cell manufacturing) with a combined budgetary outlay of INR 44,038 crore to drive the growth for Electric vehicles

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100% FDI is allowed under this sector under the automatic route

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The xEV component market is expected to grow to ~$12 bn by 2025

Government Support

Charging Stations

 Charging stations do not need a separate licence under the Electricity Act of 2003 as of April’18

Demand Creation

An outlay of INR 10,000 cr has been made for FAME-II over 3 years till 2022. INR 8597 cr has been set aside for incentives and INR 1000 cr has been kept for charging infrastructure

Production Linked Incentive Scheme on Advanced Chemistry Cell (ACC) (Incentives worth INR 18,100 Crore)

Launched and approved in 2021 at a budgetary layout of INR 18100 Crore over a 5-year period. Under the scheme, the government seeks to boost local manufacturing of advanced chemistry cell to bring down prices of battery in the country, which will reduce the cost of electric vehicles as well. The scheme was designed to be technology-agnostic. The beneficiary firm were free to choose suitable advanced technology, machinery, raw materials and other intermediate goods for setting up cell manufacturing facility to cater for any application. This scheme was oversubscribed by 2.6 times (130 gwh). After final evaluation, a total of 4 companies were selected for incentives under Production Linked Incentive (PLI) Scheme for Advanced Chemistry Cell (ACC) Battery Storage. This includes Reliance New Energy Solar Limited (5GWh Awarded and 15 GWh waitlisted); Ola Electric Mobility Private Limited (20 GWh awarded); Hyundai Global Motors Company Limited (20 GWh awarded) and Rajesh Exports Limited (5GWh awarded).

The scheme closed on 14th January 2022

Charging as a Service:

Ministry of Power has issued a notification clarifying a clause in the Electricity Act 2003 that charging for the purpose of charging an electric vehicle is classified as a service and that no licence is required for this business activity

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2W fleets are likely to shift to EVs much more rapidly.
The electric two-wheeler market in India is emerging on account of increased government policies supporting battery-powered vehicles, the growing awareness toward the environment, increasing petrol prices, and stringent emission norms.
2Ws are expected to be one of the early adopters of electrification. High vehicle utilization and easy home or workplace charging would drive the uptake in the commercial 2W segment.

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What is the Production Linked Incentive scheme for Advanced Chemistry Cells?

Advance Chemistry Cells (ACCs) are the new generation advance energy storage technologies that can store electric energy either as electrochemical or as chemical energy and convert it back to electric energy as and when required.

Integrated battery value can be broadly divided (at the sales end) into the battery pack and the ACCs. While several companies in India have already started investing in battery packs assembly, the capacities of these facilities are too small when compared to global averages. Investments in manufacturing and overall value addition for ACCs are still negligible in India. Hence almost entire domestic demand of ACCs is still being met through imports.

Through this Scheme, the Government of India intends to optimally incentivize potential investors, both domestic and overseas, to set- up Giga-scale ACC manufacturing facilities with emphasis on maximum value addition and quality output and achieving pre committed capacity level within a pre-defined time-period.

The budgetary outlay for this scheme is INR 18,100 cr and it envisages setting up of a cumulative ACC manufacturing capacity of fifty (50) GWh for ACCs and an additional cumulative capacity of (5) GWh for Niche ACC Technologies.

The bidding for this scheme closed on 14 January 2022 and received overwhelming response.

For further details,, please refer to our report on the PLI ACC scheme here:

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What are the benefits from the government for purchase of EVs?

Central as well as State governments have been promoting adoption of EVs by providing fiscal as well as non-fiscal incentives. Some of the incentives being provided on purchase of EVs are:

  • FAME India Scheme Phase II (mentioned above)
  • Goods & Services Tax (GST) on EVs has been reduced from 12% to 5%,
  • Income tax deduction can be claimed on the interest paid on loans taken for purchase of EVs
  • Various demand side incentives being offered by 15+ state governments such as exemption from registration fees, special parking zones, upfront incentives on purchase and much more. For details of state subsidies, please refer to our report on state wise comparison of incentives here

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It is said that Electric Vehicles (EV) are also called as Emission Elsewhere Vehicle (EEV). Is it true that EVs are just transferring emission from city area to the place where power is being generated?

The fact is that a typical conventional hatchback has 130-140 gm/km of CO2 emission comparing to an electric vehicle for 100 gm/km when charged by grid and when solar charged, there is ~0 gm/km CO2 emission from an electric vehicle.
Please visit the link for more information.

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What is the Faster Adoption and Manufacturing of hybrid and Electric vehicles (FAME) scheme?

The FAME scheme was introduced in April 2012 to be implemented over a period of 6 years till 2020 to support hybrid/electric vehicles market development and its manufacturing. Under this scheme, demand incentives will be availed by buyers (end users/consumers) upfront at the point of purchase and the same shall be reimbursed by the manufacturers from Department of Heavy Industries, on a monthly basis.

The Union government recently announced its decision to extend the second phase of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme by two years to March 31, 2024

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How do citizen avail the demand incentive on the purchase of a xEV?

The demand incentive benefit will be passed on to the consumer upfront at the time of purchase of the xEV itself by way of paying reduced price.

For more information, please visit the following link.

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Invest India Timeline

Mahindra Electric Mobility merges with parent Mahindra & Mahindra

Mahindra Electric Mobility merges with parent Mahindra & Mahindra

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