Context:

The Union Budget has announced a bold move to make a transition to electric vehicles, and offered a tax incentive for the early adopters.

Its stated vision to leapfrog into an era of electric mobility and domestic vehicle manufacturing, led by public transport and commercial vehicles, is forward-looking.

It is also inevitable because poor air quality and noise pollution have sharply affected the quality of life, and pose a serious public health challenge.

An additional income tax deduction of ?1.5 lakh is now offered on interest paid on loans to purchase electric vehicles, and the GST Council has been moved to cut the tax on e-vehicles to 5% from 12%. Both demands were made by the industry earlier.

NITI Aayog plans to Electric Mobility:

As the NITI Aayog has stated, the goal of shifting to electric vehicles cannot make progress without deadlines, and a market-driven approach sought by some sections of the automotive industry will leave India’s capabilities and infrastructure for e-mobility trailing others, notably China.

With 2030 as the outer limit, the imperative is to fix a realistic time-frame by which scooters, motorcycles, three-wheel carriages and, later, all new vehicles will be battery powered.

There is a significant outlay under the second iteration of the Faster Adoption and Manufacturing (of Hybrid and) Electric Vehicles (FAME) plan of ?10,000 crore, to give a fillip to commercial vehicles and to set up charging stations.

About FAME 2 scheme:

Recently, NITI Aayog & Rocky Mountain Institute (RMI) Release Technical Analysis of FAME II Scheme.Report looks at potential saving in areas of energy, oil and carbon emissions.

The main objective of the scheme is to encourage Faster adoption of Electric and hybrid vehicle by way of offering upfront Incentive on purchase of Electric vehicles and also by way of establishing a necessary charging Infrastructure for electric vehicles.

The scheme will help in addressing the issue of environmental pollution and fuel security.

To encourage advance technologies, the benefits of incentives, will be extended to only those vehicles which are fitted with advance battery like a Lithium Ion battery and other new technology batteries.

Lithium-ion batteries can match internal combustion engine performance, being more energy-dense than lead acid batteries, but are very expensive.

Customers are likely to be frightened off by prices and hold on longer to old bikes and scooters.

Since these old bikes emit more pollutants than newly certified internal combustion engines, it will offset environmental gains from the conversion to electric.

Indian govt targeting up to 7M sales of hybrid and electric vehicles by 2020:

The National Electric Mobility Mission Plan, NEMMP 2020 is a national mission document providing the vision and a roadmap for faster adoption of electric vehicles and their manufacturing in the country.

The Indian government has a target to achieve six to seven million sales of hybrid and electric vehicles by 2020 under the National Electric Mobility Mission Plan (NEMMP), the Parliament was informed.

The NEMMP plan has been designed to enhance national fuel security, to provide affordable and environment-friendly transportation and to enable the Indian automotive industry achieve a global manufacturing leadership.

NITI Aayog’s goal is to increase the usage of clean-fuel technology and give Indian citizens cleaner air to breathe.

According to media reports, road transport and highways ministry will be tasked with coming up with a framework to phase out the sale of diesel and petrol vehicles by 2030 which is one of the significant sources of air pollution.

Infrastructure the need of the hour:

There is a strong believe that electric infrastructure will have a massive scale going forward. But the bad part is there is no subsidy for those that want to set up EV infrastructure as a business.

In fact, Ather has more than 30 charging stations in Bengaluru while the other companies in this space are yet to foray into support infrastructure.

As of today, there are only 250 charging stations in the country and they mostly catering to three-wheelers. To make this transition viable, infrastructure is a key factor.

SIAM (Society of Indian Automobile Manufacturers) the nodal body for Indian automobile industry reports that the country currently sells close to 750,000 electric vehicles a year, a majority of these are three wheelers, which sold 6,30,000 units, with 1,26,000 of these three-wheelers.

In 2018, the entire Indian EV industry saw sales of only 56,000 units.

A longer-term policy priority has to be the setting up of lithium battery production and solar charging infrastructure of a scale that matches the ambition. The Centre has accepted some of the demands of the auto industry to popularise EVs.

The government should provide incentives for CNG vehicles and should also come out with a scrappage plan for vehicles to incentivise customers to buy new vehicles.

Conclusion:

The budgetary measures will have an immediate impact on the pricing of electric vehicles and bring in more models, but it will take a sustained effort by the Centre, in partnership with State governments, to enable a fast rollout of charging infrastructure.

In a bold and far-reaching move, India’s electric vehicle goals are set to flourish if NITI Aayog has its way.

The government think tank moved a Cabinet note to address e-mobility targets for a greener India, which emphasises on the sale of only electric vehicles by the year 2030.

This would go a long way in addressing India’s clean fuel ideology and reduce high pollution levels.

The government said it is planning to set up a National Mission on Transformative Mobility and Battery Storage to bring clean and connected technologies that can usher in an era of shared and sustainable EV infrastructure in the country.