Greening the road ahead

India is one of the largest automobile markets in the world. It is also the world's largest manufacturer of three-wheelers, second largest manufacturer of two-wheelers and third largest passenger vehicle manufacturer. Hence, the country is also massively dependent on oil imports, with a USD 112 billion import bill in FY2019, which is equivalent to four per cent of the gross domestic product. Pollution in many Indian cities has reached alarming levels. A combination of all these factors have made a strong case for the government to move towards green mobility and encourage the use of electric vehicles (EVs) in the country.

Even though the government aims to achieve 100 per cent local production of EVs under its ‘Make in India’ initiative, the Indian EV industry is still in the nascent stage. While official estimates have projected that the EV market in India would reach 17 million units by 2030, the EV sale was able to cross only one million mark in 2022. The Ministry of Road Transport and Highways has announced a target of achieving the ‘EV30@2030’, that is 30 per cent of newly registered private cars, 40 per cent of buses, 70 per cent of commercial cars and 80 per cent of two- and three-wheelers will be electric by 2030. As one of the top producers of greenhouse gases, electrification of India’s transport sector continues to be critical to rapidly reduce emissions.

Whatever be the targets, data from the official Vahan Portal shows that EV sales in financial year 2021-22 was 4.3 lakh units, which was 3.3 times of EV sold during FY 2020-21. In FY 2021-22, around 2.3 lakh registered electric two-wheelers, 1.7 lakh electric three-wheelers, 19,000 electric four-wheelers and 0.01 lakh buses were sold. This was a mere 2.7 per cent of the total Internal Combustion Engine vehicles sold in 2021-22, the official figures showed. A major reason for the low popularity of the EVs and their practically minuscule sales across the country was the high upfront cost as compared to the Internal Combustion Engines (ICE) vehicles.

As of November 30, 2022, there were a total of 18,02,967 EVs running on the Indian roads, out of which the maximum number of vehicles (9,19,025) were three-wheelers and another 8,13,431 two-wheelers. There were merely 70,511 electric cars or four-wheelers on that date all across the country, as per data from the Ministry of Road Transport and Highways. Taking note of this fact, a parliamentary committee recently expressed surprise that such a situation existed at a time when there was a huge demand existed for four-wheelers in general. It emphasised that the market for EVs in India was growing very slowly. In 2021, electric two-wheelers, particularly scooters, emerged as the most popular EV segment, accounting for over 96 per cent of EV sales in the country. Though several manufacturers were launching various models of electric cars and buses in the market, the overall adoption of EVs in India was still in its early stages.

It was ten years ago that the government had launched the National Electric Mobility Mission Plan (NEMMP) in 2013 with much fanfare. It was a plan providing a vision and a roadmap for faster adoption of EVs (full range of hybrid and electric vehicles) and their manufacturing in the country. But the progress has remained much lower than expected. The most significant reasons identified by experts in the field are higher upfront cost of EVs compared to ICE vehicles and inadequate charging infrastructure throughout the country. The other factors which have hindered faster adoption of EVs are the ‘limited’ range of EV batteries, dependence on imported components, lack of domestic lithium supply for batteries, lack of skilled labour for servicing and repair of EVs, and fast-changing EV technology.

The Ministry of Heavy Industries has been currently implementing the second phase of the FAME India (Faster Adoption and Manufacturing of hybrid and Electric Vehicles in India) for a period of five years since April 2019. The scheme, with a total budgetary support of Rs 10,000 crore, primarily focuses on supporting electrification of public and shared transportation. It also aims to support, through demand incentive, 7090 e-buses, five lakh e-three wheelers, 55,000 e-four-wheeler passenger cars and 10 lakh e-two wheelers. In addition, it would support the creation of charging infrastructure.

In its report submitted to Parliament in the last session, the Committee on Estimates, led by BP Bapat, has recommended that the government should extend the FAME-II scheme beyond its current March 31, 2024 timeline by two more years to allow more time for evaluation of its effectiveness and make necessary adjustments or changes to promote electric vehicles. Stressing that the scheme’s momentum should be maintained till the desired benefits are achieved, the 30-member panel identified lack of charging infrastructure as one of the main barriers to adoption of EVs. It recommended that, as per the Power Ministry’s guidelines, there should be at least one charging station at every 25 kms on both sides of a highway and also at least one such station for long-range heavy duty EVs at every 100 kms. For a city, there should be at least one charging station in a grid of 3kmx3km. The Committee also recommended that the Heavy Industries ministry should coordinate with other ministries and charging infrastructure operators to frame a comprehensive plan for the rollout of a nationwide public charging network.

Under the FAME-II scheme, nine four million-plus cities of Mumbai, Delhi, Bengaluru, Hyderabad, Ahmedabad, Chennai, Kolkata, Surat, and Pune, were targeted for electric buses. Under the scheme, public sector firm Energy Efficiency Services Limited (EESL) had undertaken aggregation of demand in these cities for e-buses to bring about electric mobility in public transportation. But only five of the nine targeted cities — Kolkata, Delhi, Bengaluru, Hyderabad and Surat, opted for it. The Committee wanted the government to inform them about the reasons why the other four cities declined and whether these four cities had any alternate schemes in place of FAME-II.

The Committee noted that the Centre had issued a notification advising states to waive road tax on EVs to help reduce the initial cost of EVs. In response, West Bengal, Delhi, Uttar Pradesh, Punjab, Madhya Pradesh, Karnataka, Haryana, Gujarat, Jammu & Kashmir, Assam, Bihar, Telangana, Meghalaya, Rajasthan, Chhattisgarh, Kerala, Chandigarh, Uttarakhand, Puducherry and Odisha have waived off or reduced the road tax on EVs. Observing that these states were not getting compensated for the loss of revenue due to the waiver or reduction of road tax on EVs from the Union Government, the Committee recommended that some compensation should be given to these states. Regarding GST, the panel said the government had lowered GST on EVs from 12 to five per cent and on chargers and charging stations from 18 to five per cent to promote electric mobility in the country. It, however, wanted the government to make a comparative study on the GST rate on EVs and their components and spares vis-à-vis the ICE vehicles and their parts. It also asked the Finance Ministry to consider further reducing or waiving off GST, so that their upfront cost is reduced further to make it more affordable to the common man.

Overall, the panel has asked the government to “bring more vigour into their efforts” and further increase incentives on EVs, bring down the upfront cost, address the challenges faced by EV industry and accelerate the transition towards green mobility.

Views expressed are personal