Govt To Promote Local EV Makers, Aims To Boost Employment

The Indian government is designing a policy to incentivise domestic production of electric vehicles (EVs) and to promote local manufacturing of the vehicles while creating a level playing field for the industry. This move aims to boost the electric vehicle sector but also generate employment opportunities while potentially reducing car prices.

Interestingly, Tesla and VinFast are actively considering the Indian market for the introduction of a range of EVs, along with Maruti Suzuki, Hyundai Motor India, Kia, Tata Motors, and Mahindra & Mahindra (M&M).

According to the information available, the Department for Promotion of Industry and Internal Trade (DPIIT), operating under the Ministry of Commerce & Industry, has initiated discussions to formulate a scheme for subsidising electric four-wheeler manufacturers based on their investments in local EV production.
 
Government officials are currently deliberating on the minimum investment threshold required from automakers to qualify for benefits under the scheme as they assess the financial implications.
 
Notably, the manufacturing of EVs not only aligns with the nation's commitment to cleaner energy but also holds the potential to create numerous job opportunities, contributing to economic growth and development.
 
Last month, Minister of Commerce & Industry, Piyush Goyal, emphasised the government's dedication to ensuring a level playing field in the industry for all automakers interested in the Indian EV market, highlighting that electric vehicles represent the future of the automobile industry.

Following are the existing policy for electric vehicles industry:

FAME

The Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) was projected by the central government on April 1, 2015. This project was a critical component of India’s electric mobility. The FAME India Programme intends to encourage using all types of automobiles.

FAME II plan was launched in April 2019 with an INR 10,000 crore budget to support 500,000 e-three-wheelers, 7,000 e-buses, 55,000 e-passenger vehicles, and a million e-two-wheelers. The plan was set to expire in 2022. Nevertheless, the Government of India has chosen to prolong the FAME-II plan through March 31, 2024, in the budget for FY 2022-23.

PLI Scheme

Production Linked Incentive (PLI) Scheme for Automobile and Auto component industry with a budgetary outlay of INR 25,938 crore, provides financial incentives to boost domestic manufacturing of Advanced Automotive Technology products including electric vehicles and their components.  The scheme provides incentive up to 18 per cent of eligible sales of electric vehicles and their components.

Battery Swapping Policy

With this policy, the government aims to unify the battery specifications used in EVs to help in the promotion of EVs. Suppose all the batteries in the same category of EV have the same configuration. In that case, consumers do not need to be concerned about the configuration of new batteries being installed when switching batteries. Battery switching, if done correctly, is projected to gain acceptability in commercial applications such as 2W and 3W automobiles, allowing for faster penetration in these segments. This strategy will help battery manufacturers reduce prices.

Duty Reduction On EVs

Under this policy, the customs charges on nickel ore and concentrates are reduced from 5 per cent to none, nickel oxide from 10 per cent to 0 per cent, and ferro nickel from 15 per cent to 2.5 per cent, according to the budget. Nickel Manganese Cobalt (NMC) is an essential component of lithium-ion batteries used in electric cars (EVs).

Special E-Mobility Zone

The government aims to come up with electric car mobility zones. Only electric cars or equivalent vehicles will be authorised to operate in the administration-designated zones. Similar policies are standard in several European nations as well as China.

EV Market In India

The Indian automobile industry is the fifth largest in the world and is expected to become the third largest by 2030. As per India Energy Storage Alliance (IESA), the Indian EV industry is expected to expand at a CAGR of 36 per cent. As population rises and demand for vehicles grow, dependence on conventional energy resources is not a sustainable option as India imports close to 80 per cent of its crude oil requirements. NITI Aayog aims to achieve EV sales penetration of 70 per cent for all commercial cars, 30 per cent for private cars, 40 per cent for buses and 80 per cent for two and three-wheelers by 2030.

This is in line with the goal to achieve net zero carbon emission by 2070. Over the last three years, 0.52 million EVs were registered in India, according to the Ministry of Heavy Industries. EVs recorded robust growth in 2021, supported by the implementation of favourable policies and programmes by the government.