Government's EV Policies Driving India's Green Revolution
Every year, on September 9, World Electrical Vehicle (EV) Day is observed across the globe, with an aim to spread awareness about the need for electric mobility among the public and encourage the transition towards sustainable transportation.
Brief History of EVs
It is worth mentioning that the first electric vehicles were developed in the early 19th century when, in 1832, Scottish inventor Robert Anderson invented the first crude electric carriage. However, it wasn’t until the second half of the 19th century that some of the first practical electric cars were built.
As the EVs were easier to drive than steam-powered and gasoline-powered cars, in the latter half of the 19th century, the EVs acquired popularity in the United States for driving in the city. However, due to multiple factors like better roads, the discovery of Texas crude oil, lower fuel prices, better combustion engines, Ford’s mass production of cheaper vehicles and other factors, the use of EVs started to decline in the 1920s. Due to the soaring oil prices in the 1960s and environmental concerns after the 1990s, EVs evinced interest from researchers, policymakers, and the public.
Adoption of EVs in India
Although the adoption of the electricity vehicles industry in India is still at a nascent stage in India, it is rapidly growing. As per the data provided by the Ministry of Road Transport and Highways, Government of India, to the Parliament in 2013, only 53,387 electric vehicles were registered in the country however, as of August 2023, the number increased to 28,30,565.
The latest Economic Survey underlines that India’s automotive industry will play a critical role in the transition towards green energy. It is estimated that the country’s EV market is expected to grow at a compound annual growth rate (CAGR) of 49% between 2022 and 2030 and that the annual sales of EVs in 2030 may cross one crore units, leading to the creation of five crore direct and indirect jobs by 2030.
The adoption of EVs will not only positively impact the country’s economy but also help in achieving India’s target of net zero emissions by 2070. To facilitate smooth growth in the sector and achieve the ambitious target of having EV sales penetration of 30% of private cars, 70% of commercial cars, 40% of buses and 80% of two and three-wheelers by 2030,v the government is taking several steps:
Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME India) Scheme was launched in 2015 to reduce dependency on fossil fuel and to address issues of vehicular emissions. Currently, Phase-II of the scheme has been implemented with an outlay of INR 10,000 Cr ($ 1.2 Bn) for a period of 5 years commencing from April 1, 2019. Out of total budgetary support, about 86% of the fund has been allocated to create demand for EVs in the country by supporting 7000 e-Buses, 5 lakh e-3 Wheelers, 55000 e-4 Wheeler Passenger Cars (including Strong Hybrid) and 10 lakh e-2 Wheelers.
Production Linked Incentive (PLI) Scheme for the Automotive Sector, launched in September 2021 with a budgetary outlay of INR 25,938 Cr ($ 3.1 Bn) to boost domestic manufacturing of advanced automotive technology (AAT) products and attract investments in the automotive manufacturing value chain. The SOP details that the scheme has two parts: Champion OEM, which will make electric or hydrogen-powered vehicles, and Component Champions, which will make high-value and high-tech components. The scheme has attracted a proposed investment of INR 74,850 Cr ($ 9 Bn) against the target estimate of investment of INR 42,500 Cr ($ 5.1 Bn) over a period of five years.
PLI Scheme for National Programme on Advanced Chemistry Cell (ACC) Battery Storage was launched in 2021 to enhance India’s manufacturing capabilities for the manufacture of ACC in India with an outlay of INR 18,100 Cr ($ 2.1 Bn) for seven years (including two years of gestation period). The incentive will be disbursed thereafter over a period of five years on the sale of batteries manufactured in India. So far, three companies have been selected with a manufacturing capacity of 30 Gwh. The second phase of the scheme will be launched soon.
Additionally, the government has taken the following measures to provide impetus to green mobility further:
- The Union Budget 2023-24 extended the customs duty exemption to the import of capital goods and machinery required for the manufacture of lithium-ion cells for batteries used in electric vehicles.
- GST on electric vehicles has been reduced from 12% to 5%; GST on chargers/ charging stations for electric vehicles has been reduced from 18% to 5%.
- Both commercial as well as private battery-operated vehicles are given green license plates and are exempted from permit requirements.
- Waiver on road tax on EVs, which in turn will help reduce the initial cost of EVs.
- To expand and strengthen the Public Electric Vehicle Charging Infrastructure across the nation, the Ministry of Power issued the revised consolidated Guidelines and Standards. The guidelines involves private players to instal EV charging stations. In this direction, the Oil Marketing Companies have announced the setting up of 22,000 EV charging stations in prominent cities and on national highways across the country.
India's electric vehicle market is gathering momentum and is poised for significant growth in the next few years. The shift towards green mobility will further accelerate through government policy interventions, advancements in technology, cheaper mobility options, and increasing awareness of the environment and savings.
Decarbonising transport will enable India to considerably lower carbon emissions and achieve India’s commitment to net zero carbon emissions by 2070.
- https://sansad.in/ls/questions/questions-and-answers Lok Sabha 17