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EV Revolution in India: The next big thing

Summary: Explore the below thought leadership article to learn about India’s progress on revolutionizing EVs. These are more environment friendly and better for the economy.

Written by Tanya  Mittal & Daksh Sharma on Digilah (Tech Thought Leadership).

India has set ambitious targets for electrifying its public transport fleet in this decade. 

While this may be the beckoning of a new dawn, the transport sector in itself contributes for 13.5 per cent of India’s energy-related carbon-emissions. This leads to substantial increase in air pollution. 

India faces two key challenges; first is improving its overall air quality. Second is transitioning to a decarbonized economy. 

We need to start by addressing transportation-based emissions. We need to start deriving appropriate solutions in achieving electrification and switching to cleaner fuels.

By 2030, Niti Ayog forecasts a high penetration of Electric Vehicle sales: for two-wheelers and three-wheelers (80%), four-wheelers (50%), and buses (40%). 

An overall electrification of the transport sector can eventually improve air quality. 

India has made a promise at COP26 to cut its emissions to net zero by 2070. This means achieving carbon neutrality and not adding to the amount of greenhouse gases in the atmosphere.

To reach this target India must transform into a global hub for electric vehicles manufacturing.

Step one in this process is to transition from sales of ICE-vehicles to 100% plug-in electric vehicles (EV)

The ICE-vehicles or Internal Combustion Engine vehicles are powered by gasoline or diesel fuels and emit pollutants which contribute to poor air quality.

The Clean Energy Ministerial (CEM), which is a unique partnership of the world’s key economies to accelerate global clean energy, has announced a new campaign – EV 30@30. 

This CEM campaign will certainly speed up the deployment of electric vehicles globally. This will target at least 30 percent new electric vehicle sales by 2030. India has joined this pledge. 

It is equally important to consider the policies India has in place to usher in the so-called EV revolution at this stage.

As part of the policy framework introduced in this regard, the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) II scheme was adopted in 2019. 

This was initially meant to give electric mobility a big boost in the country. This was approved by the Union Cabinet, chaired with a support of Rs 10,000 crore for a period of three years. 

This scheme is the expanded version of the previous FAME India 1. FAME was launched on April 1st, 2015, with a total amount of Rs 895 crore. 

By offering incentives upfront on the purchase of electric vehicles, FAME India Phase II aims to encourage faster adoption of electric & hybrid vehicle.

By establishing the necessary charging infrastructure for EVs, which is very critical if e-mobility wants to make inroads in the country.

As per Press Release by Ministry of Heavy Industries dated 09 July 2019, the phase one of the FAME scheme, has supported adoption of 2,78,000 EVs in different forms.  There is a total incentive of INR 343 crores.

This year’s budget statistics also reinforce India’s focus towards green mobility. 

The subsidy under the FAME scheme for fiscal 2024 is projected at Rs 5,172 crore, compared with the revised estimate of Rs 2,897 crore. 

An increase in vehicle population also has contributed significantly to India’s air pollution. It has caused serious health issues due to high exposure to emissions (PM and NOx). 

With the two-wheeler and three-wheeler population increasing at an unstoppable rate, switching to a public transport system becomes crucial. 

In India, public transport remains a primary means of access to employment, community resources, health and other related facilities.

An inclusive and integrated public transport system needs to be created to provide the same level of comfort and accessibility to people. 

The bus sector provides employment opportunities and better access to mobility than the automobile industry. 

Government of India grants subsidy to manufacturers who make 50% of the content in an EV through localised material.

In the USA and UK market there are no such rules for subsidy grants. This policy makes manufacturing of EV’s difficult for new entrants in the market, mostly the electric vehicle segment. This segment is dominated by the developers who possess the capital to burn in manufacturing like TATA, Mahindra, JIO Bp (Charging Stations) etc. 

Many stakeholders have highlighted the need of increasing concept of charging stations in office and retail spaces for better consumer experience. 

The FAME–II policy focuses on setting up at least 1 charging station in 3kmx3km grid. It is not sufficient enough for the users if the end result of sales is actually met by 2028.

Keeping these factors in mind, India needs to cautiously tread the road towards improvement of its public transport services. 

Other steps should be to 

(1) build confidence among users,

(2) provide financial support to operators

(3) realign investments in road infrastructure.

India is the third-largest user of transport automobiles in the world. 70% of its transport energy needs are fulfilled by importing fossil fuels. 

Latest forecasts from the Petroleum Planning and Analysis Cell indicate this heavy dependence on fossil fuels crimps our speedy transition to a clean fuel economy.

As a solution, India must gradually shift to fuels which are import substitutes, cost-effective, indigenous and pollution-free. 

In doing so, India recently switched to the world’s cleanest petrol and diesel i.e. Bharat Stage VI (BS VI) fuel from BS IV fuel in April 2020.

With this, India began using fuel containing just 10 parts per million (PPM) of Sulphur. This is expected to curb airborne particulate matter, one of the major contributors of air pollution in the country.

India has also introduced various transport policies in the past, which impacted vehicle exhaust emission. This has influenced the characteristics of the vehicles present in the fleet and their activity levels.

Hence, curbing and reducing heavy polluting vehicles and scrapping old vehicles from roads is the need of the hour.

India’s Vehicle Scrappage Policy was a revolutionary step taken in 2021 to remove unfit vehicles from roads and boost the electric vehicle sales to control air pollution levels.

Integration of this policy can lead to high impact social gains like overall improvement of air quality in the cities, reduction of fossil fuel usage, and reduction in GHG emissions.

The path to adoption of Electric Vehicle in the transportation segment of India will be a key factor that will drive them towards carbon neutrality.

Policies related to it are fundamentally on the right track but due to the changing market scenario and demand the policy makers will have to adapt accordingly. 

Create a fixed framework for the adoption and integration of incentives to the EV segment. This will enable manufacturing and upscaling at the estimated pace.

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