In a recently released report called Mobilizing Finance for Electric Vehicles in India, NITI Aayog has stated that the transition to Electric Vehicles (EVs) will require a cumulative investment of Rs 19.7 lakh crore in EVs manufacturing, charging infrastructure, and batteries between 2020 and 2030.
The report, published by Niti Aayog and Rocky Mountain Institute, has also identified a market size of Rs 3.7 lakh crore for the financing of EVs in 2030. Right now the biggest need for a successful transition from petroleum based vehicles to EVs is infrastructure updation which further requires capital financing.
“The need of the hour is to mobilise capital and finance towards EV assets and infrastructure. As we work to accelerate domestic EV adoption, and push for globally competitive manufacturing of EVs and components such as advance cell chemistry batteries, we need banks and other financiers to step up to lower the cost and increase the flow of capital for EVs,” said CEO of NITI Aayog, Amitabh Kant.
In order to develop India’s EV ecosystem, we need to overcome some issues such as infrastructure availability, technology cost, consumer behavior, and financing. The report’s main focus is on financing, because end users currently face multiple challenges like high interest rates, high insurance rates, and low loan to value rates.
The Niti Aayog’s report recommends bringing the financing of EVs under priority sector lending and interest subvention. It also suggested increasing the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) II subsidy, thus providing 50 per cent incentive to the buying consumer.
Digital lending, and development of a secondary market for increasing the resale value of EVs were also mentioned as steps to ease the transition. Furthermore, the study suggested a reduction in GST on EVs, charging components, and batteries. Overall, India looks to encourage domestic manufacturing EV and become a huge market for EV by 2030.
The Budget 2021 presented by Finance Minister Nirmala Sitharaman did not bring a good news that could directly impact the EV industry, especially like reduction in the tax slabs that was expected otherwise. However, introduction of voluntary Vehicle Scrapping policy was welcomed by the EV industry which believes that this will boost the sale of EVs.
Also, the tax holiday for a year has relieved many startups who were into the production of EVs, especially two wheeler. The Government’s decision to introduce 20,000 buses under Public-Private Partnership with a budget of 18,000 crore has made EV manufacturers aspiring if as much as possible of these acquired buses will be electrically powered.
Another important and game-changer move is the introduction of Production Linked Incentive scheme. GOI has announced that it will spend 1.9 lakh crore in this scheme to lure global manufactures to make India a manufacturing hub. Talking of electronic industry, an additional 40,000 crore will be dedicated to them through this scheme, thus pushing the manufacturing of EV and other instruments, components, and devices in India.
According to experts, India is poised to become the fourth largest market for EV (with approximately 70% market share, and more than 70 lakh vehicles) by 2040. India’s domestic companies like Tata and Reliance are working towards manufacturing of EVs, and setting up of charging infrastructure respectively. There are numerous startups and other companies who have made their investments in Delhi, Pune, and Bengaluru to start production of batteries (lithium ion), chargers, and other components.
Tork Motors, Okinawa, Revolt Intellicorp, ION Energy, and Ather Energy are introducing their two wheeler EVs in India. Tata motors and Kia are trying to become pioneers in the EV car market of India.
The entry of Tesla as Tesla India Motors in Bengaluru has further electrified the Indian EV industry. It looks like that with the Government’s helping hand, the EV industry in India is going to rise as predicted and hopefully, we are advancing to a new age where India will be possessor of cutting edge technology and become a leading global manufacturer of high tech vehicles based on clean energy.
Need for Transition to Electric Vehicles
Is the need to adopt vehicles running on electricity only based on the need to secure a better source of energy which does not cause pollution? Well, not really, because there is so much more. We take a look at it, here.
First of all, yes, electricity is a better alternative to petroleum as it causes no air pollution at all. India is a country to 22 most (air) polluted cities out of top 30 in the world, and vehicular exhaust is responsible for one-third of the total pollution caused. In the developing nation India, its rapidly urbanising population has the potential to carry these numbers to more worrying levels. Therefore, we really need electric vehicles.
Secondly, India relies heavily on oil (petrol and diesel) as its vehicular fuel which is prone to volatile market conditions, and geopolitical factors. Adding to that, India is third largest importer of crude oil in the world, and has spent billions of dollars to buy crude oil. Thus, we need to not only adopt clean energy resources like electricity, but also develop advanced infrastructure to produce it and possibly move towards becoming a global supplier of such resources in the future. This will not only secure our environment, but also save us an enormous amount of capital that can be used to for the upliftment of poor. Also, an estimate shows that adopting such measures will help generate at least 2 million jobs in India.
Lastly, something we should be concerned about the most but still do not care enough, Climate Change. What good are vehicles when we would not be there to run them? Climate change is the biggest threat looming above the human civilization, and has the potential to starve us to death, maybe leading to mass extinction. The best we can do to prevent is by reducing the greenhouse gases emission, especially that caused by vehicular exhaust. India has set goals to cut its GHGs emissions by 33%-35% below 2005 levels by 2030, and thus EVs will be major factor in achieving that goal.