Sustainable Mobility: The Role of Government Initiatives in Shaping India's Electric Vehicle Landscape

The term sustainable mobility refers to the movement of people and goods in an environmental-friendly way. The main purpose of sustainable mobility is to moderate the extreme use of fossil fuel consumption and to reduce emissions so that our ecosystems can reload themselves.

Electric Vehicle offer lower emissions as compared to traditional gasoline vehicles and hence leave a lower carbon footprint. Among the transportation options, EVs show potential in addressing climate change risks.  Governments worldwide have implemented policies to increase the penetration of electric vehicles.

In India, the government has introduced various schemes across the EV value chain to incentivize its production, adoption, and usage. In July 2023, NITI Aayog laid down the roadmap for the growth of electric mobility in India aligning it with the Indian government’s vision of achieving net Zero emissions by 2070.

The NITI Aayog has laid specific targets by vehicle type in pursuit of its objective to achieve 30% EV sales penetration by 2030. The targets by specific vehicle type are:

• 30% in Private cars
• 70% in Commercial vehicles
• 40% in Busses
• 80% in two-wheeler
• 80% for three-wheeler

Further, the government aims for 100% local production of EVs as part of the 'Make in India' initiative.

EV industry in India

The number of electric vehicle registrations in India surged from 1.3 million in 2018 to a 15.29 million by 2023, marking an impressive eleven-fold increase.

• No of EV registered over the years (in millions of units)

Source: press information bureau

• Key players of Electric vehicles industry

EV is a growing industry, and like any growing industry it has witnessed a number of domestic and international firms setting up initiatives across the EV value chain. These companies are joining and engaging in partnerships for improving battery efficiency, and as well as making EVs more affordable and convenient for customers, which thereby leads accelerating growth in the EV markets.

Evolving consumer preferences

• Consumer opting for Sustainable vehicles
  • While making purchase decisions, Sustainability has become one of the top factors for consumers with safety, brand reputation, and cost.
  • This change is driven by increased environmental awareness, leading to a growing interest in electric vehicles (EVs) and other sustainable transportation options.
• Challenges
  • Challenges such as range anxiety, charging infrastructure, and high initial costs continue.
  • Despite all these concerns, the rising demand for sustainable options is pushing the industry to innovate, providing a lot of opportunities for the automotive sector to meet the changing needs of environmentally conscious consumers.
• Industry's Initative
  • In response to customer awareness, the industry has been leveraging technological advancements and government support to make sustainable choices more available.
  • Innovative solutions such as fast-charging stations and community charging options have emerged, enhancing convenience for EV owners.

Government Initiatives Supporting EV Adoption

• FAME India
  • FAME stands for Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India. The policy aims to encourage people to use electric vehicles in the country. The scheme is a government subsidy program part of the National Electric Mobility Mission Plan (NEMMP). It started in 2015 and has two parts: FAME India Phase I and Phase II.
    • Phase I
      • In this phase of the scheme, the focus was on four main areas: (i) Generating demand, (ii) Advancing technology, (iii) Piloting projects, and (iv) Developing charging infrastructure.
      • In Phase I, ~ US$ 65.3 million (Rs. 529 crore) were allocated for a period spanning four years, from 2015 to 2019. This allocation facilitated support for around 2.78 lakh Electric and hybrid vehicles, totaling incentives of US$ 42.3 million (Rs. 343 crore). Also, 520 charging infrastructures and 465 buses received approval for funding across different cities and states as part of this initiative.
    • Phase II
      • It was started in April 2019 with a total budget of US$ 1.43 billion (Rs. 10,000 crore).
      • This phase focuses mainly on making public and shared transportation electric. It provided incentives totaling US$ 234 million (Rs. 1,869 crore) to support 470,000 electric vehicles. Additionally, it approved 6,315 e-buses for use in over 65 cities and sanctioned 2,877 charging stations. Over 100 electric vehicle models were also approved during this period.
      • As part of the FAME-II scheme, financial assistance, such as subsidies, was provided for establishing public charging infrastructure. This initiative aims to build trust and confidence among electric vehicle users.

• Production Linked Incentive (PLI) Scheme

  • PLI scheme for automotive sector was launched in September 2021 with a budget of US$ 3.1 billion (Rs. 25,938 crore).

  • Its aim was to enhance domestic manufacturing of advanced automotive technology (AAT) products and attract investments into the automotive manufacturing value chain, surpassing the initial target estimate of US$ 5.1 billion (Rs. 42,500 crore) over a 5-year period.

• Electric Mobility Promotion Scheme

  • The scheme started in April 2024 and will end in July 2024 with a total budget of US$ 60.18 million (Rs. 500 crore). It aims to enhance green mobility and encourage electric vehicle manufacturing in the country.
  • Electric two-wheeler and three-wheeler are only applicable for the scheme.
  • The Scheme supports 3.7 lakh EVs, comprising 3.3 lakh` Electric 2 wheelers, and 38,828 Electric 3 wheelers (which also includes 13,590 rickshaws & e-carts and 25,238 e-3Ws in L5 category), offering incentives exclusively for advanced battery-equipped vehicles.

• Battery Swapping Policy

  • The government introduced battery swapping policy to reduce lengthy charging durations and enhance EV efficiency by swapping drained batteries with fully charged ones. The initial draft for this policy came in February 2023.
  • The policy addressed the standardization of battery sizes and other specifications, particularly for two- and three-wheelers. Furthermore, the preliminary policy encompassed matters concerning battery safety protocols, individual identification codes for each battery, recycling and refurbishment processes, and the potential implementation of a subsidy scheme.

Other Government initiatives

• The exemption from customs duties for importing machinery and equipment required to create lithium-ion cells for electric car batteries was extended in the Union Budget 2023–2024.
• Both commercial and private battery-operated vehicles receive green license plates and are not required to obtain permits.
• The Goods and Services Tax (GST) on electric vehicles has been lowered from 12% to 5%, while the GST on charging stations for EVs has been reduced from 18% to 5%.
• Due to the constant effort from government 12,146 public EV charging stations are operational across the country.
• Waiver on road tax on EVs to lower the initial cost of EVs.

Benefits of Government policies and Incentives for EV adoption

Road Ahead

EVs are promoted as a comprehensive solution to numerous issues in India, such as air pollution and the high oil import expenses that uses considerable foreign exchange reserves.

The government has outlined ambitious targets for the Indian EV market. It targets a strong 49% CAGR from 2022 to 2030, aiming for annual EV sales of one crore units by 2030. This ambitious goal is expected to generate five crore direct and indirect jobs by 2030.

The government plays a crucial role in promoting EVs popular in India. They're doing this by establishing rules, offering rewards, and enforcing laws. This helps encourage more people to use electric cars, which helps the environment and reduces our need for petrol. It also fosters innovation to new ideas for making electric cars better.

Despite facing challenges like expensive batteries, the outlook for electric cars in India remains bright and the industry is well positioned to witness sustainable growth.