Was 2019 a year of cheer for electric vehicle industry in India?
No doubt, the year saw may robust regulations and policies in favor of the budding electric vehicle industry of India but such steps have not translated into higher sales numbers.
New Delhi: On many levels 2019 can be considered as a year of positive developments and synchronisation for India’s evolving electric vehicle industry. Throughout the year, the growth mode of industry kept multiplying with each passing day, be it in terms of government support and policies, influx of investments, introduction of new business or regulations.
The year began with bang for EV players with the government’s approval for Rs 10,000-crore programme under the FAME-II scheme for promotion of electric and hybrid vehicles in the month of February. The scheme, which came into effect on 1st April 2019, is aimed to encourage faster adoption of electric and hybrid vehicles by way of offering upfront incentive on purchase of electric vehicles and also by way of establishing necessary charging infrastructure for EV.
Till November, close to 285,000 buyers of electric and hybrid vehicles have benefitted from the subsidies provided under the FAME-India program to the tune of Rs 3.6 billion, according to the Ministry of Heavy Industries and Public Enterprises (MHIPE).
The next good news came in the month of July with the GST reduction on EVs from 12 per cent to 5 per cent, which helped a lot in improving the sentiments. In the same month, Finance Minister Nirmala Sitharaman in Union Budget announced additional income tax deduction of Rs 1.5 lakh on interest paid on loans taken to buy electric. In her maiden budget speech, the Finance Minister also underlined her plan to make India a global manufacturing hub for EV.
Additionally, the union cabinet also proposed customs duty exemption on certain parts EV parts including e-drive assembly, on-board charger, e-compressor and a charging gun. The intention was to cut down the cost of EVs in order to boost the sales in the country.
Besides consumer adoption, the domestic EV industry saw significant development on the manufacturing front as well. According to a Niti Aayog report, India needs a minimum of 10 GWh of cells by 2022, which would need to be expanded to about 50 GWh by 2025.
Therefore, to localise the value chain, union cabinet outlayed a five-year phased manufacturing programme (PMP) till 2024 for a few large-scale, export-competitive integrated batteries and cell-manufacturing Giga plants in India. With this the government aimed “to bring technology-driven sustainable and holistic mobility solutions within the reach of common man by scaling up the manufacture of these vehicles.”
With the industry commitment towards developing green sustainable mobility, states are also leading with their policies to achieve their own EV targets. It is worth highlighting that around 11 states have either issued or proposed electric vehicle policies till date.
While Maharashtra, Karnataka, Andhra Pradesh, Uttar Pradesh, Tamil Nadu and Kerala have their final policies ready, states like Uttarakhand, Telangana, New Delhi and Bihar have their policies in the draft stage.
Seeing the concrete moves both from government and industry side, the electric vehicle market, battery market, and charger market are expected to witness CAGRs of 53.64 per cent, 58.86 per cent, and 59.58 per cent, respectively, during 2019-2030, according to a recent market intelligence report by BIS Research.
According to Ajeya Saxena, Lead Analyst at BIS Research, “The government target for 30 per cent adoption of electric vehicles by 2030 is expected to be majorly driven by the electrification of two-wheeler, three-wheeler, and commercial vehicles in India. Lower rate of adoption of electric vehicles in the passenger vehicle segment is expected to have a limited impact in achieving these targets.”
As this industry is gathering pace no companies, particularly startups, wants to be left behind the race. Enhancing scope of business model in EV space, where companies like Ather Energy, Revolt, Okinawa majorly focused on individual riders, newbies like Li-ions Elektrik Solutions aiming to expand in commercial segment first.
However, despite robust push not much traction was seen on the sales front. Currently EV market penetration is only 1 per cent of the total vehicle sales in India, and of that, 95 per cent of sales are electric two-wheelers. While only 1,500 electric cars were sold for personal use in the last eight months, electric two-wheeler sales under FAME crashed by 94 per cent in the first six months of FY20, as per industry reports.
Now, as we head towards the new year 2020, the EV industry strongly believes that the future of Indian electric mobility rests on the exponential rise in infrastructure and harnessing emerging business opportunities.
Source: auto.economictimes.indiatimes
