Growing EV Uptake

Policy interventions increase awareness and adoption

The electric vehicle (EV) industry in India is at a nascent stage with significant demand for the deployment of necessary charging infrastructure, enabling policies and regulations, manufacturing facilities and advanced battery technologies. India was ranked as the fourth largest automotive market in the world with 3,082,974 units sold in year 2021. As per a report by the International Council on Clean Transportation, EVs will create carbon emission mitigation advantage of about 74 to 77 per cent compared to the internal combustion engine vehicles by 2030. Thereby, EV industry can significantly enable mitigation of carbon footprints by the automobile sector. As per a report by India Energy Storage Alliance, the Indian EV market is projected to grow at a compound annual growth rate of 36 percent by 2026.The adoption of EVs is slowly witnessing acceptance in India with registrations soaring up from 26,081 in March 2021 to 77,248 in March 2022. Further, to support EV infrastructure on public highways, a total 184 public charging stations are installed across nine corridors/expressways.

The renowned Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India (FAME) is a flagship scheme by the government of India and was launched in 2015 for promoting electric mobility in the country. The second phase, FAME II, with a budget allocation of 100,000 million came into force on April 1, 2019 and was extended till March 31, 2024. To support the agenda for National Electric Mobility Mission Plan, many states have rolled out state EV policies with numerous incentives for buyers, sellers and other players in the market. According to the government backed Vahan dashboard, Delhi, Uttar Pradesh, and Karnataka recorded the highest EV sales amounting to 125,347, 255,700 and 72,544 respectively for the year 2021. However, Telangana has the highest number of charging stations installed by far.

Each state policy has a diverse mix of incentives aiming for faster adoption of EVs. The incentives for interest subsidies, tax exemptions and power tariff concessions vary from state to state. The policies designed include both supply side and demand side features. Exemption on power tariffs for setting up charging stations varies across states like Karnataka, Punjab and Uttarakhand and these states offer 100 percent tax duty on the electricity tariff for an initial period of five years. Andhra Pradesh offers fixed power cost reimbursement of Rs. 1.00 per unit for a period of five years. To subsidise land cost for setting up charging stations, concessional registration charges and rebates on stamp duties are offered under policies of Karnataka, Haryana, Punjab, Kerala, Maharashtra, and Tamil Nadu.

On the demand side, subsidy for electric two-wheelers is linked to the battery size in most states. The highest subsidy is offered in Delhi at Rs 5,000 per kWh, and a maximum of Rs 30,000 per kWh (provided the battery is bigger than 5 kWh). Second on the list currently is Maharashtra which offers a subsidy of Rs 5,000 per kWh, with the total subsidy capped at Rs 10,000 per kWh.  For four wheelers, most states have capped the total number of electric cars to be subsidised at 10,000 units. Maharashtra currently leads the way in this segment.

Apart from capital incentives offered by states, few other innovative measures have been considered by states. To digitize EV space, Madhya Pradesh’s EV policy provides for cloud charging to carry out all metering and transactions digitally using payment applications. Tamil Nadu’s EV policy includes supplying renewable energy on preferential basis at EV charging stations with zero connection cost. To cope up with battery waste, Punjab’s EV policy focuses on creating an E-market place for sale of used batteries and setting up of recycling units. It also prohibits disposal of EV batteries in trash and landfills thereby encouraging battery buy back from original equipment manufacturers and private players in the industry.

Thus, such diverse policies offering numerous incentives to sensitise citizens about energy transition are crucial. Adequate fiscal incentives by the government with timely deployment of the required infrastructure would help in effectively tapping the potential of EV market in India. Continuous efforts at policy level and consumer awareness can enable India’s transition to EV space at a swifter pace.

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