The Union Budget 2022 on Tuesday highlighted the need for e-mobility encouraging ..
Electric Vehicle Policy Framework in India
FAME I and FAME 2, the PLI Scheme, and the Scrappage Policy are policies and programs of the Union government that encourage the use of electric vehicles and give manufacturers incentives.
The use of electric vehicles is encouraged by state policies in roughly half of Indian states.
A financial subsidy on the purchase, exemption from road tax, registration fees, and low loan interest rates are examples of user-friendly concessions.
initiatives for the public sector, private and public transportation agencies, and last-mile delivery companies to purchase EVs in bulk.
Construction of infrastructure for the manufacturing of batteries and automobiles, charging infrastructure, and scrapping facilities.
EV promotion policies at various levels in India
With crude oil imports totaling $125 billion (or INR 8,800,000 million) in FY 2019–20, up 42% from the previous year, India is one of the world’s largest importers of fossil fuels. These imports are expected to reach three-year highs in 2020. The 2020 World Air Quality Report states that transportation is the primary source of 2.5-micron particulate matter, which causes lung and respiratory issues, and that 22 Indian cities are among the 30 most polluted cities in the world. The typical pace of new vehicle enrollment in India is 17% and expected to increment with fast urbanization. Not only does the current trend put an unreasonable strain on India’s reserves of foreign currency, but it also has negative effects on health, such as tenfolding the amount of air and noise pollution.
Many established and new vehicle manufacturers in the last mile connectivity and bulk short/long distance transportation space have begun manufacturing e-vehicles as a result of India’s E-mobility initiatives for pollution-free commercial and private transportation. The potential for expansion in India is enormous, as only 0.08 percent of the 80 million registered vehicles are made up of the roughly 69,500 EVs.
Fabricating motivators for industry and request side impetuses for clients incorporate the Quicker Reception and Assembling of Cross breed and EV (Popularity I and Distinction II), Creation Connected Impetus (PLI) plans and scrappage strategy as well as the Make in India drive, upgrade of e-charging framework, and decrease of Merchandise and Administrations Duty (GST) on EV buys. Around 69,500 electric vehicles had been sold in India as of April 15, 2021, and 114 models had been registered with the Department of Heavy Industry by 38 OEMs (Original Equipment Manufacturers). However, this only accounts for a sizable portion of total sales, and the majority of these vehicles have two or three wheels. In 2020, only 25,600 electric two-wheeled vehicles were sold by the 20 companies, a decrease of nearly 6% from 2019. Electric vehicles continue to be expensive as a result of the fact that none of the OEMs have achieved economies of scale.
The following is a description of the major government policy initiatives that have rekindled interest in electric vehicles:
1) FAME & FAME II under NEMMP
As a follow-up to the Automotive Mission Plan (AMP) 2006–2016, the “National Electric Mobility Mission Plan (NEMMP) 2020” was released in 2012. However, a number of factors, including technology, the availability of materials, local knowledge, and market acceptance, prevented the project from proceeding as planned. The first phase of FAME was implemented under this plan in April 2015 and continued until March 31, 2019. On April 1, 2019, FAME II went into effect for three years. FAME is primarily a demand-side incentive program with a focus on technology development, infrastructure creation, and increasing demand through subsidies and pilot projects (60 percent of total funds). This policy covers electric and hybrid technologies, such as plug-in hybrids, mild hybrids, strong hybrids, and battery electric vehicles.
In cities with a population of more than one million people, FAME offered a one-third discount on the price difference between an EV and a comparable gasoline vehicle with an initial budget of INR 8950 million (127 million). The subsidies included INR 150 million (2.1 million) for charging infrastructure per city and ranged from INR 1800 ($25) for a scooter to INR 6,60,000 ($9,400) for a bus (with a maximum of 100 buses per city). The goal is for EVs to account for 30% of all vehicles by 2030, and the GST on BEV purchases was reduced from 28% to 12%.
With a budget of INR 100,000 million (or $1.45 billion), FAME II focuses on demand incentives for 86% of its funding and on the development of charging infrastructure for 10%. Subsidies for 7000 electric buses, 55,000 passenger vehicles with four wheels (including powerful hybrids), 500,000 vehicles with three wheels, and 1,000,000 vehicles with two wheels are the goal of this phase.
With the goal of having at least one charging station in every 3 km x 3 km grid, this policy also supports approximately 2,700 charging stations in the nation’s largest cities, other cities with more than a million people, smart cities, and cities in hilly states. On highways, charging stations are also planned for every 25 km.
2) STATE GOVERNMENT EV PROMOTION POLICIES
Over 14 of India’s 28 states have finalized or are working on finalizing electric vehicle (EV) policies that support national policies on electric mobility. Among the states that have endorsed EV policies are Andhra Pradesh, Karnataka, Kerala, Madhya Pradesh, Maharashtra, New Delhi, Tamil Nadu, Telangana, Uttarakhand, and Uttar Pradesh. Among the states with draft policies are Punjab, Himachal Pradesh, Gujarat, and Bihar.
Two- and three-wheelers, public transportation, and the creation of new jobs are all prioritized in nearly every state’s EV policy. However, the goals, supply-side incentives (for manufacturing), and demand-side incentives (for consumer and charging infrastructure investments) of the policies differ.
The policies target the number of electric vehicles (Kerala wants one million EVs and 6,000 e-buses on the road by 2022 and 2025, respectively); exemptions from road taxes and registration fees (Andhra Pradesh will reimburse EVs in full for road taxes and registration fees until 2024); funding for the viability gap in the purchase and operation of public transportation vehicles, exclusion of the toll, free permits for fleet drivers, and free parking (Kerala); lowered GST and interest-free OEM loans (Karnataka); constructing charging infrastructure (Andhra Pradesh intends to install 100,000 charging infrastructures by 2024); free charging or waiver of power obligation (Gujarat); promoting the charging of electric vehicles with solar and other renewable energy sources (Madhya Pradesh); allowing fuel stations in Maharashtra to install EV charging facilities; promoting EV charging stations in office and housing complexes and providing additional incentives to prevent old vehicles from being scrapped (Delhi); single-window approval for the construction of EV manufacturing and battery disposal facilities in Uttar Pradesh.
3) EXTENDED PLI SCHEME NOV 2020
Domestic manufacturers receive supply-side incentives based on incremental revenue from the Production Linked Incentive (PLI) program. In India, both domestic and foreign businesses are encouraged to establish new factories or expand those already in operation.
On April 1, 2020, the PLI program was enacted to provide a financial incentive for increasing domestic production of listed electronic components and mobile phones. For a period of five years following the base year, eligible businesses received an incentive ranging from 4 to 6 percent on incremental sales made during the base year of 2019–2020. Under the PLI program, contract manufacturing has already begun at Foxconn, Wistron, and Dixon Technologies. In the past two years, India has overtaken China as the largest mobile phone manufacturer. In addition, the income tax rate for new manufacturing businesses was decreased from 25% to 17% by the Indian government.
The PLI program was expanded to 10 additional industries on November 11, 2020, including the Automotive & Components industry. These programs have a total budget of INR 1,960,000 million, or $26 billion. The PLI scheme aims to support $520 billion in manufacturing over five years with an incentive of 5% of production value, with INR 570,420 million ($8.1 billion) going to automobiles and auto components and INR 181,000 million ($2.6 billion) going to battery manufacturing. The automobile industry’s PLI-related guidelines will soon be finalized by the Department of Heavy Industries.
On November 11, 2020, the PLI scheme for the manufacturing of advanced chemistry cell (ACC) batteries was also approved as part of this significant push for EV vehicles. An improved battery chemistry has the potential to cut costs while employing cutting-edge and safer technology, as battery costs can account for up to 50% of the total cost of a vehicle. Within five years of the beginning of the project, manufacturers will be eligible for the subsidy if they achieve 60% value added. The subsidy is also available to new technologies that emerge in the next ten years. Tata Chemicals Ltd., the Suzuki Motor Corporation-Toshiba Corporation-Denso Corporation consortium, Exide, and Amara Raja are among the businesses that are planning or have already started projects in Gujarat to manufacture lithium-ion batteries. In Gujarat, Manikaran Power Limited intends to construct a lithium extraction refinery in either Sanand or Dholera.
4) VEHICLE SCRAPPAGE POLICY
In February 2021, the Union Budget made an announcement regarding the Vehicle Scrappage Policy. It aims to increase the use of new, fuel-efficient vehicles in order to reduce India’s oil imports; to cut down on noise and environmental pollution; to get rid of old, unsafe, and unreliable vehicles and increase road and vehicle safety; to make it easier for OEMs to obtain inexpensive recycled inputs like plastic, steel, aluminum, steel, rubber, and electronics. The auto industry has the potential to increase its revenue by 10,000,000,000,000 INR (142 billion USD) from the current INR through the implementation of this policy alone. 64 billion dollars, 4,500,000 million
Provisions are broadly arranged into these three groups:
a) Registration and fitness tests:
According to the Central Motor Vehicle Rules, the primary criteria for determining a vehicle’s fitness will be its braking system, safety equipment, and emission tests. Rules for fitness tests and scrapping centers will take effect on October 1, 2021. Government and PSU vehicles older than 15 years will be scrapped in April 2022. Heavy commercial vehicles will have to pass fitness tests starting in April 2023, and other vehicles will have to pass fitness tests starting in June 2024. Fees for fitness certificates and tests for commercial vehicles older than 15 years
b) Financial incentives:
OEMs will offer a 5% discount on the purchase of a new vehicle in exchange for the scrapping certificate. State governments will offer a road tax rebate of up to 25% for personal vehicles and up to 15% for commercial vehicles. There will be no registration fee for new vehicles if the scrapping certificate for the old vehicle is available. Scrap value for the old vehicle will be up to 4–6% of the ex-showroom price of a new vehicle.
c) Scrapping centers:
Encourage the establishment of automated fitness centers using a public-private partnership (PPP) model by the state government, the private sector, automobile manufacturers, and others. Encourage the opening of a Registered Vehicle Scrapping Facility (RVSF).
Discounts for eligible users, the development of infrastructure for fitness testing of old vehicles, and a well-connected network of scrapping centers will all play a major role in the policy’s implementation. Howrah, Karnal, Hyderabad, and Greater Mumbai are the four scrapping centers that Tata Motors has planned to open.
India will be able to make a significant leap forward in EV adoption and environmental sustainability thanks to the aforementioned policies, enhanced infrastructure, and a shift in the market’s acceptance of electric vehicles.
For the past two and a half decades, Indian entrepreneur Neeraj Kumar Singal has been active. He is the chief executive officer of the SEMCO Group, a conglomerate with interests in power, forging, real estate, defense, healthcare, real estate, and railway. He graduated from Hansraj College, University of Delhi, with a college degree. Neeraj is well-connected worldwide and enjoys meeting new people because he is a member of numerous organizations, including YPO, HBS Club of India, Indian Angel Network, and TIE. Neeraj has worked on numerous projects to build a robust lithium-ion ecosystem and is committed to renewable energy. SEMCO Infratech is a provider of solutions for processing and packing machinery for lithium-ion cells. It was established in 2006 and has its headquarters in New Delhi. In order to meet the needs of customers all over the world, the company had collaborated with numerous other businesses to develop cutting-edge technologies.
The global market for electric vehicles (EVs) has grown significantly in the past ten years. With significant advancements in battery manufacturing capabilities, charging infrastructure, and new EV model development, China has dominated the electric vehicle industry. Due to its large manufacturing capacity, China can produce electric vehicles at a lower rate. In contrast, the penetration of electric vehicles in India is lower than in other markets. When it comes to electric vehicles, the country has a low acceptance rate. Model types, charging infrastructure, and financial incentives for EV manufacturers all need to be improved significantly. In terms of passenger cars and commercial vehicles (CV), India currently ranks among the top five and holds market leadership positions in the 2W and 3W segments. Despite this, the country has very few electric vehicles. Since 2012, approximately 1,04806 EVs have been registered in India. The daily use of electric buses is gradually becoming accepted. Around 400 electric buses were sold in FY2021. In FY2022, it is anticipated that this number will reach around 900. In its budget for 2021-22, the Indian government reiterated its support for the electric vehicle industry. In order to broaden the EV market in India, the government proposed a number of reforms.