EV Takeoff in India
India is at the threshold of a clean mobility revolution. A revolution that will result in cleaner air, cheaper and more accessible modes of transport, financial security due to freedom from fluctuating oil prices, and a boost to prosperity thanks to the creation of new jobs.
Electric vehicles are simpler - a battery plus motor and controller is all that’s replacing the entire engine and its related systems in ICE vehicles. Electric vehicles are more powerful (at least when it matters i.e. at low speed operations). Electric vehicles are greener and they can enable a zero emission ecosystem, provided that the grid shifts to renewable energy. Electric vehicles are smarter electronic controls are 3-5x higher in EVs (as compared to ICE) and that translates into features beyond anything that consumers have seen before in an ICE vehicle. For a consumer, electric vehicles are a delight to drive. Electric vehicles are key enablers to the Connected, Autonomous and Shared future of mobility.
Electric vehicles are simpler - a battery plus motor and controller is all that’s replacing the entire engine and its related systems in ICE vehicles. Electric vehicles are more powerful (at least when it matters i.e. at low speed operations). Electric vehicles are greener and they can enable a zero emission ecosystem, provided that the grid shifts to renewable energy. Electric vehicles are smarter electronic controls are 3-5x higher in EVs (as compared to ICE) and that translates into features beyond anything that consumers have seen before in an ICE vehicle. For a consumer, electric vehicles are a delight to drive. Electric vehicles are key enablers to the Connected, Autonomous and Shared future of mobility.
Policy Updates FAME I and FAME II
FAME – I
Under the national mission, DHI formulated the Faster Adoption and Manufacturing of Hybrid and Electric vehicles (FAME) scheme with an approved financial outlay of INR 7.95 billion for a period of two years. The focussed areas of development in this scheme were R&D of pilot projects, charging infrastructure, and demand creation. The demand incentive provided under the scheme could directly be availed by the buyers upfront at the point of purchase.
The two years scheme was later extended for another two years up to 31st March 2019. FAME–I had a planned budget allocation of 7.95 billion as demand incentives, but only 5.29 billion was allocated in over four years. The subsidies were applicable for two-wheelers, three-wheelers, passenger cars, light commercial vehicles, and buses.
FAME – II
In March 2019, DHI notified phase II of the FAME scheme with a total budget outlay of INR 100 billion until March 2022, which has been extended till March 2023. FAME – II proposes INR 86 billion as demand incentives to be provided upfront during the purchase of EVs.
To encourage public transport, the buses would receive a subsidy of 40% of the cost of vehicles, and a 20% subsidy would be given to other commercial vehicles. The scheme would cover incentives for 1.56 million vehicles until 2022. To provide a further push to clean public mobility, the DHI approved a sanction of 5595 electric buses to 64 cities, state government entities, State Transport Undertakings (STUs) for intra-city and intercity operation under the scheme.
Fund allocation under the FAME-II scheme is focussed more on demand incentives and setting up charging infrastructure.The broader objective is to set up 2,700 charging stations in metros, cities with a million plus population and highways. In addition, there is a provision for one slow charger to be provided to a buyer for every e-bus purchased and one fast charger for every 10 e-buses purchased.
Under FAME II, stringent eligibility conditions are imposed to promote local manufacturing.
Under the FAME II Scheme 76,071 EVs have been sold as of May 2021, out of which E2W accounted for the sales of 58,673 units. Karnataka accounted for the largest share of EVs sold (17,105), followed by Tamil Nadu (11,718), Maharashtra (8,555), Delhi (5,492), and Rajasthan (5,499).
Under the national mission, DHI formulated the Faster Adoption and Manufacturing of Hybrid and Electric vehicles (FAME) scheme with an approved financial outlay of INR 7.95 billion for a period of two years. The focussed areas of development in this scheme were R&D of pilot projects, charging infrastructure, and demand creation. The demand incentive provided under the scheme could directly be availed by the buyers upfront at the point of purchase.
The two years scheme was later extended for another two years up to 31st March 2019. FAME–I had a planned budget allocation of 7.95 billion as demand incentives, but only 5.29 billion was allocated in over four years. The subsidies were applicable for two-wheelers, three-wheelers, passenger cars, light commercial vehicles, and buses.
FAME – II
In March 2019, DHI notified phase II of the FAME scheme with a total budget outlay of INR 100 billion until March 2022, which has been extended till March 2023. FAME – II proposes INR 86 billion as demand incentives to be provided upfront during the purchase of EVs.
To encourage public transport, the buses would receive a subsidy of 40% of the cost of vehicles, and a 20% subsidy would be given to other commercial vehicles. The scheme would cover incentives for 1.56 million vehicles until 2022. To provide a further push to clean public mobility, the DHI approved a sanction of 5595 electric buses to 64 cities, state government entities, State Transport Undertakings (STUs) for intra-city and intercity operation under the scheme.
Fund allocation under the FAME-II scheme is focussed more on demand incentives and setting up charging infrastructure.The broader objective is to set up 2,700 charging stations in metros, cities with a million plus population and highways. In addition, there is a provision for one slow charger to be provided to a buyer for every e-bus purchased and one fast charger for every 10 e-buses purchased.
Under FAME II, stringent eligibility conditions are imposed to promote local manufacturing.
- Localisation of up to 40% for buses, 50% for other vehicle categories of ex-factory price
- Subsidy linked to battery size with no reference to range/ performance: INR 20,000 per kWh for buses; INR 10,000 per kWh for other vehicles
- Maximum subsidy cap across categories
Under the FAME II Scheme 76,071 EVs have been sold as of May 2021, out of which E2W accounted for the sales of 58,673 units. Karnataka accounted for the largest share of EVs sold (17,105), followed by Tamil Nadu (11,718), Maharashtra (8,555), Delhi (5,492), and Rajasthan (5,499).
Extesion of FAME II
On 11th June 2021, the Ministry of Heavy Industries and Public Enterprises released a notification, making partial modifications to the FAME-II Scheme. The modifications indicate that the government is focusing on E2Ws to push the adoption of EVs in India. As per the notification:
On 25th June 2021, the Ministry of Heavy Industries and Public Enterprises released another notification, notifying about the extension of the FAME II scheme till 31 March 2024.
Extension of validity of FAME-II certificates
The Ministry of Heavy Industry and Public Enterprises, Department of Heavy Industries (DHI) has released a notification4 extending the validity of FAME II certificates for all EV Models (E2W,E3W and E4W) approved under FAME II by one year. The notification also states that OEMs/Testing Agencies will have to submit the revalidation certificate within an additional timeline of one month from the last validity date of the certificate. If the vehicle model(s) is not revalidated within the stipulated period, its registration on the FAME India Scheme portal is liable to be cancelled.
- Incentives on E2Ws have been increased from INR 10,000/kWh to INR 15,000/kWh.
- Cap on incentives for E2Ws increased from 20% of cost of vehicle to 40% of cost of vehicle
- EESL will aggregate demand for 3 lakh Electric 3-Wheelers for multiple user segments. Details will be worked out by EESL for implementation.
- For Electric Buses, 4 million plus cities (Mumbai, Delhi, Bangalore, Hyderabad, Ahmedabad, Chennai, Kolkata, Surat, and Pune) will be targeted. EESL will go for aggregation of demand in these 9 cities for remaining E-buses under the Scheme on OPEX basis. The details shall be worked out by EESL for implementation.
On 25th June 2021, the Ministry of Heavy Industries and Public Enterprises released another notification, notifying about the extension of the FAME II scheme till 31 March 2024.
Extension of validity of FAME-II certificates
The Ministry of Heavy Industry and Public Enterprises, Department of Heavy Industries (DHI) has released a notification4 extending the validity of FAME II certificates for all EV Models (E2W,E3W and E4W) approved under FAME II by one year. The notification also states that OEMs/Testing Agencies will have to submit the revalidation certificate within an additional timeline of one month from the last validity date of the certificate. If the vehicle model(s) is not revalidated within the stipulated period, its registration on the FAME India Scheme portal is liable to be cancelled.
PLI Scheme for Advanced Chemistry Battery Cells
The government of India has approved the proposal of the Department of Heavy Industry for the implementation of the Production Linked Incentive (PLI) scheme for 'National Programme on Advanced Chemistry Cell (ACC) Battery Storage’. This scheme aims to achieve a manufacturing capacity of 50-Gigawatt hour (GWh) of ACC and 5-GWh of ‘Niche’ ACC with an outlay of Rs 18,100 crore.
ACCs are the new generation of advanced storage technologies that can store electric energy either as electrochemical or as chemical energy and convert it back to electric energy as and when required.
ACCs are the new generation of advanced storage technologies that can store electric energy either as electrochemical or as chemical energy and convert it back to electric energy as and when required.
Each selected ACC battery storage manufacturer will have to to set-up an ACC manufacturing facility of a minimum five (5GWh) capacity and ensure a minimum 60 per cent domestic value addition at the project level within five years.
The beneficiary firms have to achieve a domestic value addition of at least 25 per cent and incur the mandatory investment Rs 225 crore/GWh within 2 years (at the Mother Unit Level) and raise it to 60 per cent domestic value addition within 5 years, either at mother unit, in-case of an Integrated Unit, or at the Project Level, in-case of 'Hub & Spoke' structure." It is estimated that it could lead to net savings of Rs2-2.5 lakh crore on account of oil import bill reduction during the period of this programme due to electric vehicle adoption as ACC manufacturing is expected to accelerate EV adoption.
ACCs are the new generation of advanced storage technologies that can store electric energy either as electrochemical or as chemical energy and convert it back to electric energy as and when required.
ACCs are the new generation of advanced storage technologies that can store electric energy either as electrochemical or as chemical energy and convert it back to electric energy as and when required.
Each selected ACC battery storage manufacturer will have to to set-up an ACC manufacturing facility of a minimum five (5GWh) capacity and ensure a minimum 60 per cent domestic value addition at the project level within five years.
The beneficiary firms have to achieve a domestic value addition of at least 25 per cent and incur the mandatory investment Rs 225 crore/GWh within 2 years (at the Mother Unit Level) and raise it to 60 per cent domestic value addition within 5 years, either at mother unit, in-case of an Integrated Unit, or at the Project Level, in-case of 'Hub & Spoke' structure." It is estimated that it could lead to net savings of Rs2-2.5 lakh crore on account of oil import bill reduction during the period of this programme due to electric vehicle adoption as ACC manufacturing is expected to accelerate EV adoption.
Market Landscape in India
The India Electric Vehicle Market was valued at USD 5 billion in 2020 and is expected to reach USD 47 billion by 2026 registering a CAGR of above 44% during the forecast period (2021 - 2026).
The India Electric Vehicle Market has been impacted by the outbreak of COVID-19 pandemic due to supply chain disruptions and halt of manufacturing units due to continuous lockdowns and travel restrictions across the country. However, the electric vehicle (EV) market is still in its nascent stage in India. It is expected to grow at a much faster rate during the forecast period due to various government initiatives and policies.
E-Commerce companies (Amazon, for example) are launching initiatives to use e-Mobility for last-mile deliveries to reduce carbon footprint. India is experimenting with e-Mobility for public transport and has deployed electric intercity buses across some of the major cities. In addition, state governments are also playing an active role in deployment of policies encouraging EV. For instance,
The EV market in India has gained significant momentum after the implementation of FAME India scheme with its aim of shifting towards e-mobility in wake of growing international policy commitments and environmental challenges. Moreover, India offers the world’s largest untapped market, especially in the Electric two-wheeler segment and as 100 percent foreign direct investment is allowed in this sector under the automatic route market is expected to gain momentum during forecast period.
The India Electric Vehicle Market has been impacted by the outbreak of COVID-19 pandemic due to supply chain disruptions and halt of manufacturing units due to continuous lockdowns and travel restrictions across the country. However, the electric vehicle (EV) market is still in its nascent stage in India. It is expected to grow at a much faster rate during the forecast period due to various government initiatives and policies.
E-Commerce companies (Amazon, for example) are launching initiatives to use e-Mobility for last-mile deliveries to reduce carbon footprint. India is experimenting with e-Mobility for public transport and has deployed electric intercity buses across some of the major cities. In addition, state governments are also playing an active role in deployment of policies encouraging EV. For instance,
- Kerala aims to put one million EV units on the road by 2022 and 6,000 e-buses in public transport by 2025.
- Telangana aims to have EV sales targets for 2025 to achieve 80% 2- and 3-wheelers (motorcycles, scooters, auto-rickshaws), 70% commercial cars (ride-hailing companies, such as Ola and Uber), 40% buses, 30% private cars, 15% electrification of all vehicles.
The EV market in India has gained significant momentum after the implementation of FAME India scheme with its aim of shifting towards e-mobility in wake of growing international policy commitments and environmental challenges. Moreover, India offers the world’s largest untapped market, especially in the Electric two-wheeler segment and as 100 percent foreign direct investment is allowed in this sector under the automatic route market is expected to gain momentum during forecast period.
Recent State Policies around EV
Gujarat EV Policy 2021
The Government of Gujarat released its EV policy which will be implemented from 1 July 2021 and will be valid for 4 years from the date of implementation. The state targets to achieve 2,00,000 EVs on the road. Under this policy:
Delhi EV Policy
Taking forward its electric vehicle policy in the city, the Delhi government is set to start a single window facility for installation of charging points for electric-run vehicles in private and semi-public spaces in the city. The upgraded scheme for installation of charging facilities will involve private and semi-public spaces as well as cooperative group housing societies (CGHS), high rises, Residents Welfare Associations (RWAs) etc.
Delhi Dialogue Commission of Delhi Government, which has been supervising the electric vehicle policy after a series of discussion with various representatives involved, including transport and power departments, Delhi Municipal Corporations (MCD), New Delhi Municipal Council (NDMC), Power Discoms etc., has decided to implement upgraded scheme. Delhi government further informed that institutional buildings like hospitals and commercial spaces like malls and theatres will also be involved in the policy.
West Bengal EV Policy 2021
The Power Department of West Bengal has announced the Electric Vehicle Policy 2021, aiming to place the state as a frontrunner in sustainable transportation infrastructure. The government plans to have 10 lakh EVs, combined across all segments, during the implementation period. The government is also planning to develop 100,000 public and semi-public charging stations within the same duration.
It also targets to achieve EV per public charge point ratio of 8. Further, the policy speaks of establishment of an EV accelerator cell to act as the nodal agency for implementing the electric mobility programme within the state. The cell shall facilitate inter-departmental coordination on framing regulatory mechanism and progressive policies to enhance uptake. The policy shall be effective for a period of 5 years from the date of its notification in the official gazette.
The Government of Gujarat released its EV policy which will be implemented from 1 July 2021 and will be valid for 4 years from the date of implementation. The state targets to achieve 2,00,000 EVs on the road. Under this policy:
- All models approved under the FAME-II Scheme are eligible for state subsidy.
- State Incentives amount for 2 wheeler, 3 wheeler and 4 wheeler is INR 10,000/kWh, with maximum ex-factory price to avail incentives being INR 1.5 lakhs, INR 5 lakhs and INR 15 lakhs respectively.
- Commercial public EV charging stations for 2 wheelers, 3 wheelers, 4 wheelers will be eligible for 25 % capital subsidy on equipment/machinery (limited up to Rs. 10 lakhs per station) for the first 250 commercial public EV charging stations.
Delhi EV Policy
Taking forward its electric vehicle policy in the city, the Delhi government is set to start a single window facility for installation of charging points for electric-run vehicles in private and semi-public spaces in the city. The upgraded scheme for installation of charging facilities will involve private and semi-public spaces as well as cooperative group housing societies (CGHS), high rises, Residents Welfare Associations (RWAs) etc.
Delhi Dialogue Commission of Delhi Government, which has been supervising the electric vehicle policy after a series of discussion with various representatives involved, including transport and power departments, Delhi Municipal Corporations (MCD), New Delhi Municipal Council (NDMC), Power Discoms etc., has decided to implement upgraded scheme. Delhi government further informed that institutional buildings like hospitals and commercial spaces like malls and theatres will also be involved in the policy.
West Bengal EV Policy 2021
The Power Department of West Bengal has announced the Electric Vehicle Policy 2021, aiming to place the state as a frontrunner in sustainable transportation infrastructure. The government plans to have 10 lakh EVs, combined across all segments, during the implementation period. The government is also planning to develop 100,000 public and semi-public charging stations within the same duration.
It also targets to achieve EV per public charge point ratio of 8. Further, the policy speaks of establishment of an EV accelerator cell to act as the nodal agency for implementing the electric mobility programme within the state. The cell shall facilitate inter-departmental coordination on framing regulatory mechanism and progressive policies to enhance uptake. The policy shall be effective for a period of 5 years from the date of its notification in the official gazette.
Section -7
Many companies have attained stepladder growth by identifying the winds of change in policies, which sometimes open up new business models. Those companies are also able set the agenda for future industry reforms through sustained dialogues.
Policy agenda might be construed as a specific policy ask, but this is not always the case. Moreover, a good policy agenda is accomplished only after several revisions, lengthy discussions, and healthy debate. Therefore, in the best interest of industry, leading companies deliberate, discuss and voice their concerns to the policy makers and parliamentarians.
Given the potential for a seismic shift in our nation’s political and regulatory landscape, we believe; these are times when close attention should be paid to regulatory developments. In times to come, when regulatory supervision is only going to increase, more proactive companies would continue to bear the fruit of favourable and accommodating rules.
Policy agenda might be construed as a specific policy ask, but this is not always the case. Moreover, a good policy agenda is accomplished only after several revisions, lengthy discussions, and healthy debate. Therefore, in the best interest of industry, leading companies deliberate, discuss and voice their concerns to the policy makers and parliamentarians.
Given the potential for a seismic shift in our nation’s political and regulatory landscape, we believe; these are times when close attention should be paid to regulatory developments. In times to come, when regulatory supervision is only going to increase, more proactive companies would continue to bear the fruit of favourable and accommodating rules.
