India is set to become a global hotspot for electric mobility. Concerted efforts by the central and state governments, private sector, and civil society, to lower the nation’s reliance on import-dependent fossil fuels, reduce vehicular emissions, and make cities more livable, is driving our national agenda of electrification. The last few years alone have witnessed Government of India earmark over INR 10,000 crores, as purchase subsidies and funding for charging infrastructure across the country. Further, measures like GST subvention on EVs and charging services, prioritising e-mobility under building byelaws, introducing charging and swapping guidelines, allowing the registration and sale of EVs without pre-fitted batteries, and at least 14 states and union territories introducing EV policies, are a testament to India’s commitment to a clean and green future.
States with EV policies focusing on reducing emissions by increasing clean km via electrification of shared mobility (public transit and intermediate public transport), employee transport, and urban logistics (hyperlocal deliveries), creation of charging and battery swapping stations, localised manufacturing, and job creation:
- Andhra Pradesh
- Madhya Pradesh
- Tamil Nadu
- Uttar Pradesh
- West Bengal
Figure 1: Indian states with an EV lens
Source: Author compilation
While the dual health-cum-economic crisis of Covid-19 is revealing the world’s interdependencies and vulnerabilities, it is also affording India the opportunity to build an economy that is sustainable and resilient. Covid-19-induced lockdowns has inadvertently improved air quality in our cities. This is a powerful demonstration of the impact that the widespread adoption of electric vehicles integrated with renewable energy (RE) could have on the air we breathe. Thus, with renewed attention on electric mobility, what can India do to achieve self-reliance and global dominance in mobility and energy domains?
Between 2019-20, EV sales in India increased by 20 per cent, despite the pandemic. Out of the 1.56 lakh EVs sold, 97 per cent were electric two-wheelers (2Ws) and an additional 2 percentage points were electric 3Ws. While the demand for EVs is clearly on the rise, India’s mobility market is a net importer of auto components and batteries – due to lack of an efficient system supporting low-cost manufacturing of electronic components and cost advantages afforded by neighbouring countries. An analysis by Invest India shows the total cost of importing auto components amounted to USD 17.5 billion in 2019-20. Further, as per the official figures shared by the government reported by the Times of India, India’s imports of Lithium-ion (Li-ion) batteries tripled, from USD 384 million in 2017-18 to USD 1.2 billion in 2019-20, and was six times higher than 2014-15. Li-ion batteries – whose prices are rapidly declining – are critical for both e-mobility and renewable energy storage. Therefore, India can emphasise localising the manufacturing of both EVs and batteries and lay a resilient path towards economic recovery and growth.
India’s phased manufacturing programme announced in 2019 includes subsidies for the indigenised manufacturing of power electronics and inverters for EVs, much required to bridge India’s trade deficit. Furthermore, the country has embarked on a phased journey to implement battery manufacturing at giga scale. This is a prerequisite for the success of e-mobility in India, for, 1 GWh of battery capacity can power 30,000 e-cars and 1 million homes for an hour. With a target of 50 GWh, NITI Aayog’s Advanced Chemistry Cell and Battery Gigafactory plan will support the establishment of three to ten giga-factories, of 5-20 GWh capacity each. The output-based subsidies – INR 700 crores per year starting in 2022 – is linked to committed capacity and level of indigenisation. Battery manufacturers can avail of entire depreciation at one go, and enjoy duty-free imports of lithium, iron, and cobalt to power the advanced cell chemistry, in place of the traditional lead batteries.
Phased and giga scale localised manufacturing of EVs, components, and batteries offer the necessary impetus to make India self-reliant in EV manufacturing and cater to a growing global demand for clean vehicles and clean energy. It will make India a leader in the global race to electrify transport.