The Electric Vehicles sector in India is getting very vibrant, backed by steady consumer demand and the Indian Government industry friendly EV policies. The government has strengthened incentive programmes to promote EV manufacturing, infrastructure development, and adoption in an effort to make a nation with zero emissions.
The Govt intends to convert 70% of commercial cars, 30% of private vehicles, 40% of buses, and 80% of 2-Wheelers and 3-Wheelers to battery-powered mobility.
These efforts include schemes such as FAME I and FAME II, the Production Linked Incentive programme, and the Scrappage Policy to incentivise EV makers. All of these are designed to assist India in achieving its 2030 EV target.
The EV Market in India
The Indian electric vehicle market was valued at USD 1,434.04 billion in 2021, and it is expected to reach USD 15,397.19 billion by 2027, registering a CAGR of 47.09% during the forecast period (2022-2027).
The COVID-19 pandemic had limited domestically produced electric vehicles due to the shutdown of manufacturing facilities and lockdowns. However, as restrictions eased, Electric Vehicle witnessed optimistic growth as consumers became inclined toward affordable eco-friendly transportation supported by governments incentives.
The automotive sector in India is dominated by two-wheelers (scooters, motorbikes) and three-wheelers (autos and rickshaws) that play a significant role in last-mile mobility in the country. Rising government emphasis and focus on private and government players partnership to enhance EV ecosystem in the country.
Increasing investments and product launches by major OEMs into the country and their focus on localizing supply chain facilities are expected to create a positive outlook in the market.
At the state level, at least 20 states have released or are working on their EV policies. Many people have also linked the switch to EVs, with all the investments and financial benefits that go along with it, to the economy’s recovery after the pandemic.
Electric vehicle production and adoption are experiencing healthy growth in the Indian market. Between 2021 and 2030, the market is expected to grow at a CAGR of 90%.
The National Electric Mobility Mission Plan (NEMMP) 2020 is a National Mission document providing the vision and the roadmap for the faster adoption of electric vehicles and their manufacturing in the country.
This plan was designed to enhance national fuel security, to provide affordable and environmentally friendly transportation and to enable the Indian automotive industry to achieve global manufacturing leadership. As part of the NEMMP 2020, the Ministry of Heavy Industries formulated a Scheme namely FAME India Scheme in 2015 to promote adoption of electric/ hybrid vehicles (xEVs) in India. The Phase-1 of the scheme was available up to 31st March, 2019 with budget outlay of Rs 895 Cr.
This phase of FAME India Scheme had four focus areas i.e. technological development, demand generation, pilot project and charging infrastructure components. In the 1st phase of the scheme, about 2.8 lakh xEVs were supported with total demand incentives of Rs. 359 Crore [Approx].In addition, 425 electric and hybrid buses, as sanctioned under first phase of the scheme, are deployed across various cities in the country with Government Incentive of about Rs. 280 Cr.
The Ministry of Heavy Industries had also sanctioned about 520 Charging Stations/ Infrastructure for Rs. 43 Crore (approx.) under Phase-I of FAME-India
However, many challenges must be overcome before electric vehicles become as common on Indian roads as ICEs. Some of the hurdles include:
Funding Scenario
The Ministry of Heavy Industries had also sanctioned about 520 Charging Stations/ Infrastructure for Rs. 43 Crore (approx.) under Phase-I of FAME-India Scheme.
Ministry of Heavy Industries supports 2,31,257 Electric Vehicles under Phase-II of FAME India Scheme till 1st February, 2022 by way of Demand Incentive amounting to about Rs. 827 Cr.
Ministry sanctions 2877 charging stations in 68 cities across 25 states/UTs under FAME India Scheme Phase- II
EV production is currently heavily reliant on imports. India must boost domestic production to achieve robust results. The government is already taking steps in this direction by taxing imported vehicles in order to stimulate domestic EV production.
