March 13, 2019
The government is on the right track by giving the maximum subsidy to buses, to tackle pollution in Indian cities, feel industry leaders
In March, Tata AutoComp Systems, an auto component maker signed a MoU with Australian tech company, Tritium Pty Ltd to supply DC fast chargers to EV makers
Last week, Delhi government too announced that they will install 131 charging stations in the capital
Being the 4th largest automaker in the world, India is indeed at the cusp of a huge opportunity to become a leader in the EV space worldwide.
Last month, the Indian government approved a sizable outlay of US $1.41 bn to boost electric mobility in the country and move towards its long-term goal of converting 30% of its vehicles to electric by 2030. This outlay spread over a span of three years is part of the 2nd phase of India’s signature electric vehicle scheme– the Faster Adoption and Manufacturing of Electric (and) Hybrid Vehicles (FAME) — established to encourage the manufacturing and creation of an ecosystem for EVs and hybrids.
A few days later, the government offered a detailed roadmap for the Phased Manufacturing Program (PMP) for EVs, EV components and batteries. The PMP, valid for five years till 2024, will aim to localize production across the entire EV value chain. These initiatives, including slashing GST rates on batteries used in EVs and lowering custom duties on EVs from 15-30% to 10-15%, are all clear signals of the government’s strong commitment towards sustainable mobility and clean energy. As well as indicating India’s seriousness in combating its twin concerns of environment pollution and fuel security.
Meanwhile, the Indian automobile industry, which contributes 7.2 % to the country’s GDP, has welcomed FAME II. Industry players feel the enhanced financial outlay, the mandatory made in India component, upfront subsidies to EV buyers and incentives to set up charging infrastructure have made them confident to roll-out plans for long-term investments in EV. And that incentivizing the manufacturing ecosystem will help to optimize costs and ultimately lead to reduced EV prices.
Automobile industry bodies are also backing the Indian government’s focus on public transport, which includes shared transport and two-wheelers, to drive EV adoption on its roads. FAME II provides subsidies for 1 million electric two-wheelers, 500,000 e-three wheeler rickshaws and 7,000 buses, and 55,000 four wheelers. Private cars which constitute just 18 % of vehicles on India’s roads do not fall under this subsidy bracket with FAME II’s US $800 subsidy on cars meant just for taxis and other fleet vehicles.
The government is on the right track by giving the maximum subsidy to buses to tackle pollution in Indian cities, feel industry leaders. It is this segment that can standardize better, scale faster and will have the maximum impact on lowering pollution to drive change.
Pawan Goenka, Managing Director of one of India’s leading vehicle manufacturing company Mahindra & Mahindra told The Economic Times, “So, this is a very good thrust, this is where maximum benefit will come in terms of reduction in pollution and crude oil imports.” M&M’s EVs strategy involves converting their current vehicles to EVs and launching e-KUV in six months and the electric XUV300 in one year.
The momentum is slowly building up to rally all stakeholders to come together and work towards an India solution for the roll-out of EVs. Automobile industry consultants point out that with demand stirred by FAME II, the onus falls on OEMs to manufacture, find new technologies and collaborate with other stakeholders to set up a thriving EV ecosystem.
Even as Automotive Component Manufacturers Association recently took a delegation to Israel scouting for partnerships, last month, Tata AutoComp Systems, an auto component maker signed a MoU with Australian tech company, Tritium Pty Ltd to supply DC fast chargers to EV makers. Tritium is a DC charging infrastructure firm providing chargers to the global automotive industry, their DC fast chargers capable of charging EV two-wheelers, passenger vehicles and commercial vehicles.
FAME II incentives are bound to impact ride hailing giants like Uber and Ola as well, who have been bullish about EV adoption in their fleets but were stumped by inadequate charging points. Ola, which runs ride-hailing services in more than 100 Indian cities has recently received a US $300m capital injection from Hyundai and Kia motors, part of which will be spent in building infrastructure around EVs.
All local and international auto manufacturing giants have invested in this space, a significant investment being Suzuki’s partnership with Denso and Toshiba to set up a US $200 million cell manufacturing unit in Gujarat.
The government is also pitching in to kick-start EV adoption by addressing one of the critical stumbling blocks for EV adoption in India – the lack of charging infrastructure. FAME II has earmarked US$0.4 billion to set up 2,700 charging stations across cities to facilitate one charging station in 3km X3km grid and on major highways connecting city clusters. Last week, the Delhi government too announced that they will install 131 charging stations in the capital and hoped private players will enter the fray once the model becomes financially viable.
Being the 4th largest automaker in the world, India is indeed at the cusp of a huge opportunity to become a leader in the EV space worldwide. New businesses are going to come up to power the electric power train in EVs such as manufacturing of battery, motor, chargers, energy monitors, and enterprises for recycling batteries, software development, IP control, smart connectivity solutions, telematics, robotics etc., have to come up.
At this stage, the government is keen to set the tone for a Make in India drive in EV manufacturing to avoid over-dependence on imports in the future. FAME II has laid conditions that a certain portion of EV manufacturing should be localized. EVs are also required to be fitted with advanced battery technologies with subsidies linked to performance criteria and usage of lithium-ion batteries to be eligible for subsidies. With these efforts the government is inducing OEMs to come up with indigenous disruptive EV solutions to empower India’s automotive sector already undergoing a big transformation with the influx of shared mobility, digital seamless transport connectivity and electrification of last mile connectivity.
EV expert Professor Ashok Jhunjhunwala, who has recently co-authored a white paper on electric mobility, believes that India should focus on R&D to move electric mobility by 2030. One of his suggestions involve developing innovative alternative solutions with the application of Internet of Things (IoT) to get the maximum out of batteries.
FAME II has underscored the fact that EVs are going to become a reality on India’s roads. Consultancy firm Frost & Sullivan in fact predicts that the market for electric cars in India will be around 2 million units by 2030. And, according to them “growth will be driven by changing product portfolios of OEMs, coupled with the availability of charging infrastructure and rationalization of battery prices.” In their analysis published in ET Auto, they forecast that OEMs, Tier 1 suppliers and manufacturers, energy and utility providers, insurance providers etc., will create an emobility ecosystem that will translate into a 15 % CAGR in EV sales in 2019-2025. It will be missed opportunity then for India if stakeholders do not come together, leapfrog technologies and create an indigenous EV solution for India and the world, say auto industry consultants.