E-Mobility Space in India

Introduction 

The long-awaited switch to Electric Vehicles (“EV”) in India is slowly picking up pace. With a solid increase in demand and on-the-ground traction, India's EV goals have achieved significant traction in the last few years. The growing focus on EV is mostly due to two factors: (i) combating the rising threat of air pollution; and (ii) reducing India's overdependence on crude oil imports.

India is one of the world’s largest importers of fossil fuels. According to the 2022 World Air Quality Report, India ranks 8th in the world in the list of countries with the worst air quality. Therefore, shifting to vehicles that curb the pollution levels and over-reliance on crude oil based sources of fuel has become the need of the hour.

India’s E-mobility initiatives for pollution-free commercial and private transportation have prompted many established vehicle manufacturers and new entrants to begin manufacturing the e-vehicles in the last mile connectivity and bulk short/long distance transportation space.

Startups are playing a pivotal role in the evolving electric mobility space in India. Charging infrastructure and mobility services are the key opportunity areas for startups with the emergence of various new business models. 

In addition to this, they are also creating new business opportunities for digital technologies like charging location finders and reservation applications, online payments and ride-sharing services.

From a commercial point of view the Indian Government aims to provide support to suppliers/manufacturers with regards to domestic R&D, tax savings, raw material and import subsidies. The government has set a target of EV making up to 30% of new sales of cars and two-wheelers by 2030. Since there exists no single policy or rule which will help make the shift to EV, it has come up with initiatives like

• National Electric Mobility Mission Plan 2020 (“NEMMP”), 
• Production Linked Incentive (“PLI”) scheme,  
• Vehicle Scrappage Policy 
• National Mission on Transformative Mobility and Storage

1. NEMMP:

NEMMP is a National Mission plan that provides the vision and strategy for the country's rapid adoption of electric cars and manufacturing. This strategy was created to improve national fuel security, offer inexpensive and environmentally friendly transportation, and help India's automobile sector attain global manufacturing leadership. To implement this the Government introduced FAME (defined below) under the umbrella of NEMMP. FAME was launched in two phases, with the second phase currently ongoing. FAME was introduced for  manufacturing EV and hybrid EV (hybrid electric vehicles are powered by an internal combustion engine and an electric motor).  

I. FAME - In 2015, the Ministry of Heavy Industries launched the Faster Use and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME India) Scheme to encourage the adoption of electric/ hybrid vehicles (xEVs) in India as part of the NEMMP. The scheme's Phase 1 was accessible through March 31, 2019. FAME had an initial budget of INR 8950 million and offered a one-third reduction on the difference in price between an electric car and a similar gasoline vehicle in cities with populations of more than 1 million people.

II.  FAME II - It came into effect on April 1, 2019 for a three-year period. FAME II has a budget of INR 100,000 million. Subsidies for electric buses, four-wheeled passenger vehicles (including powerful hybrids), three-wheeled vehicles, and two-wheeled vehicles are planned for this phase.

This strategy also supports the goal of having at least one charging station in every 3 km x 3 km grid in the major cities, other cities with over a million people, smart cities, and cities in mountainous states. In addition, every 25 kms on highways, charging stations will be installed. 

FAME II was extended for a further period of 2 years up to 31stMarch, 2024. Under FAME II, incentives were provided to buyers of electric vehicles in the form of an upfront reduction in the purchase price of electric vehicles.

2. PLI:

The Production Linked Incentive (PLI) plan offers local producers with supply-side incentives based on incremental revenue. Foreign corporations are encouraged to open factories in India, while domestic companies are urged to expand or open new factories. The Government of India, on September 15, 2021 approved the PLI Scheme for Automotive Sector with a budgetary outlay of Rs. 25,938 crores. Electric vehicles are covered under this PLI scheme.

3. Vehicle Scrappage Policy:

In February 2021, the Union Budget unveiled the Vehicle Scrappage Policy. It aims to reduce India's oil imports by increasing the deployment of new fuel-efficient vehicles; to reduce environmental and noise pollution by removing old, unsafe, and unreliable vehicles; and to increase the availability of low-cost recycled inputs for OEMs (Original Equipment Manufacturer) such as plastic, steel, aluminium, steel, rubber, and electronics. 

4. National Mission on Transformative Mobility and Storage

The National Mission on Transformative Mobility and Storage will develop and implement strategies for transformational mobility as well as the Phased Manufacturing Program (“PMP”) for electric vehicles, electric vehicle components, and batteries, with an emphasis on local production throughout the EV supply chain, including battery and cell manufacturing. The PMP is valid for 5 years from 2019 till 2024. The Mission will finalise the details of the value addition that can be accomplished with each level of localization, along with a defined Make in India plan for electric vehicle components and batteries. It will combine diverse initiatives to revolutionise mobility in India, the Mission would collaborate with key stakeholders in Ministries/Departments and states.

The objective of the PMP is to support setting up of large-scale, export-competitive integrated batteries and cell-manufacturing Giga plants in India.

States’ EV Policy

Around 50% of states have approved/notified dedicated EV policies to promote adoption of electric vehicles. Uttar Pradesh, Delhi and Karnataka have emerged as the top three states in terms of EV registration.

Startups pioneering in the EV mobility space

Some of the Top startups in the EV mobility space are - Ather Energy, Yulu and Tork Motors.

Startups are also being offered various benefits such as mentorship from industry experts and seed investment led by several VCs.

Conclusion

Globally, the awareness regarding fuel and energy consumption is only increasing and the Indian Government is also taking necessary measures to ensure that proper EV infrastructure is set up throughout the country. The upcoming battery swapping policy, as well as the recognition of battery or energy as a service, will aid in the development of EV infrastructure and the usage of EVs in public transit.

---

Disclaimer:

The content of this article is for information purpose only and does not constitute advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer to relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up. The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that the Author / Treelife is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof.