Electric Vehicles and Government Policies

Electric Vehicle Policy India

• Electric Vehicle as the car uses alternate fuel electricity instead of petrol or diesel.
• An electric vehicle uses one or more electric motors or traction motors for propulsion.
• There is a growing acceptance for hybrid and electric cars in the country and more and more manufacturers are entering this niche segment with an express objective of lowering the fuel import bill and running cost of vehicles.
• Conversion of vehicles to electric vehicles has the potential to save fossil fuels worth about $100 bn annually, which in turn would save the country precious foreign exchange, prevent the dependence on imported petroleum products and reduce the pollution in cities by 80-90%.

• An electric vehicle may be powered through self-contained battery, solar panels or an electric generator to convert fuel to electricity.
• India’s auto industry has become one of the largest in the world due to the competitive environment in the market.
• The turnover of the auto industry is equivalent to 7.1% as per the Review Report of Automotive Mission Plan 2016.
• The government of India approved the National Mission on Electric Mobility in 2011 and subsequently National Electric Mobility Mission Plan (NEMMP) 2020 was unveiled in 2013.
• As part of the mission, Department of Heavy Industry has formulated a scheme namely FAME – India (Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India) for implementation with effect from 1st April 2015, with the objective to support hybrid/electric vehicles market development and Manufacturing eco-system.’
• The upfront cost of electric vehicles is higher than the Internal Combustion Engine (ICE) vehicle. However, the operational cost of electric vehicles is lower than that of ICE vehicles. Further, electric vehicles are being supported by way of demand incentives under FAME India Scheme phase II to reduce the cost difference between electric vehicles and ICE vehicles.

National Electronic Mobility Mission Plan

• It was launched in 2013 with an aim to achieve national fuel security by promoting hybrid and electric vehicles (cars + buses ) in the country.
• There is an ambitious target to achieve 6-7 million sales of hybrid and electric vehicles year on year from 2020 onwards.

FAME (Faster Adoption and Manuf of Electric Vehicles), 2015 = Mo Heavy Industries and Public Enterprises

• Aim of FAME:

  1. To encourage faster adoption of Electric and Hybrid vehicles by offering an upfront incentive for the purchase of electric vehicles and also by establishing necessary charging infrastructure for electric vehicles.
  2. Fast track the goals of NEMMP, 2013.

• 4 focus areas of FAME

  1. Charging infrastructure
  2. Demand creation
  3. Pilot projects
  4. Technology development

• FAME II, 2019

  1. The Phase-II of FAME seeks to give a push to EVs in public transport and seeks to encourage the adoption of EVs by way of market creation and demand aggregation.
  2. The emphasis is on electrification of the 3 Wheeler and 4Wheeler segment for public transportation or commercial purposes. In 2 Wheeler segment, the focus will be on private vehicles.
  3. Incentives will be extended to only those vehicles which are fitted with an advanced battery like lithium-ion and other new technology batteries. Batteries make up 50% of EV costs. Hence they are subsidising batteries.
  4. FAME 2 will offer incentives to manufacturers, who invest in developing electric vehicles and their components, including lithium-ion batteries and electric motors.
  5. It proposes the establishment of charging infrastructure to be established in metros, other million-plus cities, smart cities and cities of hilly states so that there is the availability of at least 1 charging station in a grid of 3 km x 3 km.
  6. India does not have any known reserves of lithium and cobalt, which makes it entirely dependent on imports of lithium-ion batteries from Japan and China.
  7. The scheme with a total outlay of Rs 10,000 Crores over the period of three years will be implemented with effect from 1st April 2019.

National Mission on Transformative Mobility and Battery Storage

• The aim is to promote a “clean, connected, shared and sustainable” mobility initiative in the country.
• It will have an inter-ministerial steering committee, chaired by CEO, NITI Aayog that will coordinate among key stakeholders to integrate various initiatives to transform mobility in India.
• It will support and implement the Phased Manufacturing Programme (valid for 5 years till 2024) for large-scale, export competitive integrated batteries and cell-manufacturing Giga plants in India.
• The Mission will launch another programme to localize production across entire Electric vehicle value chain and finalise its details.
• It will have a ‘Make in India’ strategy for Electric Vehicle components and battery technologies.

Government Efforts for Electric vehicles:-

• Recently, the demand incentive under the FAME-II scheme has been increased to Rs. 15,000/KWh from Rs. 10,000/KWh with an increase in cap from 20% to 40% of the cost of a vehicle, thus enabling the cost of electric two-wheelers at par with ICE two-wheeler vehicles.
• The Government on 12th May 2021 approved a Production Linked Incentive (PLI) scheme for the manufacturing of Advanced chemistry cells (ACC) in the country in order to bring down prices of batteries in the country. Drop-in battery price will result in cost reduction for electric vehicles.
• GST on electric vehicles has been reduced from 12% to 5%; GST on chargers/ charging stations for electric vehicles has been reduced from 18% to 5%.
• Ministry of Road Transport & Highways (MoRTH) announced that battery-operated vehicles will be given green license plates and be exempted from permit requirements.
• MoRTH issued a notification advising states to waive road tax on EVs, which in turn will help reduce the initial cost of EVs.

• India's EV Mission 2030 = Government wants all electric fleet of vehicles by 2030.
• Automotive Mission Plan, 2026 = Bringing Indian Automotive industry into the top 3 in Engineering, manufacturing & exports of vehicles and components.
• Green Urban Transport Scheme = Reduce CO2 emissions from transportation. Govt plans to launch eco-friendly transportation facilities in urban areas.
• Green Bus Project in Nagpur was launched with the 1st Ethanol run, eco-friendly bus in Nagpur.

• Recent Efforts

  1. NITI Aayog Policy = Post-March 2023 sell only electric 3Wheelers and post-March 2025 sell only electric 2Wheelers having < 150 CC. When this policy is in effect we want domestically produced Li-ion batteries and other advanced technology batteries.
  2. Economic Survey 2019 = India can be made a Detroit of EVs. Our aim is Inclusive growth through affordable, relation and sustainable energy.
  3. Budget 2019-20 =
     1. IT exemption of 1.5 lakhs on Interest. To make India a global manufacturing hub of EVs on loan < Mar 31, 2023.
     2. GST was reduced from 12% to 5%. Inclusion of solar storage batteries and charging infrastructure in it.
     3. Custom duty exempted on certain parts of EV including e drive assembly, onboard charger to incentivise EV.

Global Fuel Economy Initiative (GFEI)

• GFEI is a global partnership of expert groups that have come together to support governments around the world to set policies for cleaner and more efficient vehicles.
• GFEI works towards its goal of a more efficient global fleet through three key activities. We undertake research, undertake global advocacy, and support countries as they seek policy solutions.
• GFEI has set a target of improving the average fuel economy (in litres/100km terms) for the global light-duty vehicle fleet by at least 50% by 2050 (what we call ‘50by50’) and by 2030 for new vehicles.
• These fuel efficiency gains would save 33Gt of CO2 by 2050 and $2 trillion by 2025, money that could be used to support the transition to electric vehicles.
• GFEI is a partnership of 6 expert organisations: United Nations Environment Programme (UNEP), FIA Foundation, International Transport Forum (ITF) of OECD, International Energy Agency (IEA), International Council on Clean Transportation (ICCT) and Institute of Transportation Studies (ITS) , University of California, Davis.

Fourfold jump in Li-ion batteries imports since 2016

• Indian Manufacturers source Li-ion batteries from China, Japan and South Korea. India is one of the largest importers in the World.
• In 2018, Central Electro Chemical Research Institute (CECRI) in Tamil Nadu's Karaikudi under CSIR and RAASI Solar Pvt Ltd signed an MoU for India's 1st Li-ion battery Project.
• China dominates the Li-ion battery market. NITI started National Mission on Transformative Mobility and Battery Project.
• The demand for Li-ion batteries in India will increase because of the e-Vehicles policy and announcements of investments worth $1.4 billion to make India 1 of the largest manufacturing hubs for e-Vehicles by 2040.

For the Hindu Editorial on e-Vehicle batteries: click here