India is planning a massive shift to electric vehicles (EVs) in the country over the next decade and a half. It is understood that the National Institution for Transforming India (NITI Aayog), the premier policy think-tank’ of the government of India which provides both directional and policy inputs, has recommended lowering of taxes and interest rates for loans on EVs.
This would also involve capping sales of conventional cars, thereby signalling a dramatic shift in policy in India, one of the world's fastest growing auto markets which in FY2016-17 crossed the 3-million sales mark in the passenger vehicle market.
According to a Reuters report, the 90-page draft report, has suggested that the government open a battery plant by the end of 2018 and use tax revenues from the sale of petrol and diesel-engined vehicles to set up charging stations for EVs. The Niti Aayog draft policy’s recommendations are aimed at electrifying all vehicles in the country by 2032 and will likely shape a new mobility.
The report, which is to be made public later this week, focuses solely on EVs and marks a sharp shift from the current policy that incentivises both hybrid vehicles – which combine fossil fuel and electric power – and electric cars.
The ‘Transformative Mobility Solutions for India’ report, co-produced with US consultancy Rocky Mountain Institute, comes a little over two months after Niti Aayog held a high-level workshop on advancing passenger mobility and transportation in New Delhi. The aim of the workshop was to explore technologies and business models to help India leapfrog the traditional approach to passenger mobility and transportation.
The Niti Aayog report's recommendations are aimed at discouraging use of fossil fuel, a strategy which similar to that of China which is aggressively driving sales of plug-in EVs.
India, the third-largest consumer of fossil fuels in the world and 80 percent dependent on imports to its domestic demand, is looking to slash its crude oil import bill by half by the year 2030.
Officials acknowledge the blueprint faces challenges. High battery costs would push up car prices and a lack of charging stations and other infrastructure means car makers, who have been consulted on the proposals ahead of publication, would hesitate to make the necessary investment in the technology.
"If we accelerate EV growth, it will be a disruption for the auto sector and would require investment, but if we're not able to adapt quickly we risk being net importers of batteries," a government source told Reuters. "There has been resistance from car makers."
While Maruti Suzuki India, the largest-selling carmaker in the country, has invested in mild-hybrid technology (SHVS), which makes less use of electric power than full hybrids, while Toyota and Honda sell their Camry Hybrid and Accord Hybrid sedans in the country. Mahindra & Mahindra is the only manufacturer of electric vehicles in India with its e2O, e-Verito and e-Maxximo.
Battery plant, battery swapping stations, higher incentives on BEVs
In 2015, as part of the National Electric Mobility Mission Plan (NEMMP), the government had launched the FAME India (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) scheme with an aim to promote eco-friendly vehicles, offering incentives on electric and hybrid vehicles of up to Rs 29,000 for bikes and Rs 138,000 for cars. It envisaged Rs 795 crore support for the first two fiscals.
The FAME India scheme is aimed at accelerating sales of eco-friendly vehicles to up to 7 million vehicles by the year 2020. However, sales of EVs have been abysmally poor. Earlier this year, the government withdrew the incentives offered to mild hybrids after 73,633 such four-wheelers were sold.
The latest Niti Aayog report, details a three-phase, 15-year programme, starting this year. To kick-start the shift, the report suggests bulk procurement of EVs, building standardised, swappable batteries for two- and three-wheelers to bring down their cost and having favourable tariff structures for charging cars.
"Prioritise battery and charging infrastructure development," the report states, while setting a 2018 goal for setting up a 250 megawatt per hour battery plant with an aim to reach one gigawatt of production by 2020.
It also recommends setting up battery swapping stations by 2018, common manufacturing facilities for components and increasing subsidies on all battery electric vehicles (BEVs) to bring them to cost parity with conventional models by 2025.
Other suggestions in the blueprint include incentivising the use of electric cars as taxis by lowering taxes, interest rates on loans for purchases and electricity tariffs for fleet operators, and lowering duties on makers of such fleet cars.