India is one of the world’s major importers of carbon fuels, with crude oil exceeding INR 8,800,000 million for FY 2019–20, up 42% from the previous year, with imports set to hit three-year highs in 2020.
Transportation is the largest source of 2.5-micron fine particulates, which causes pulmonary and respiratory ailments, and approximately twenty-two Indian cities are some of the top 30 most polluted cities.
In India, the annual rate of new car registration is 17%, and this is likely to rise as the country continues to urbanize.
The recent trend not only places excessive pressure on India’s foreign reserves but has detrimental health consequences, including a tenfold rise in noise and air pollution. Many established automakers and new entrants have begun building e-vehicles within last mile connectivity & bulk short and long-distance transit arena as a result of India’s E-mobility plans for contamination less commercial and private transportation.
The potential for expansion in India is enormous, with just 69,500 electric vehicles accounting for 0.085 percent of the country’s 80 million registered vehicles. The following are the significant policy actions of the Indian government that have inspired public interest in electric vehicles:
1) FAME
So to look at the Automotive Mission Plan of the year 2006 to 2016, the “National Electric Mobility Mission Plan of the year 2020 was issued in 2012.
However, owing to a combination of circumstances, involving innovation, materials availability, local understanding, and market acceptance, the project did not take off just as expected.
The very first stage of FAME was executed under this plan in April 2015 and it was extended until March 31, 2019. FAME began with a funding of INR 8950 million and offered a one-third reduction on the difference in price between an electric car and a similar gasoline automobile in cities with populations of much more than 1 million inhabitants.
The incentives varied from INR 20000 for a motorbike to INR 6,60,000 for a bus with a maximum of 100 buses per city), and also included INR 150 million for each city for charging infrastructure.
The GST on BEV purchases was also reduced from 28 percent to 12 percent, with the objective of EVs accounting for 30 percent of all cars by 2030.
2) FAME II
FAME II came into effect on April 1 of 2019 for a long three-year period. FAME is essentially a demand-side incentive program (60 percent of total expenditures), with an emphasis on technological development, infrastructure development, and demand stimulation through incentives and pilot projects.
This policy covers electric and hybrid cars, including moderate hybrid, large and powerful hybrid, plug-in hybrid, and battery electric vehicle has an expenditure of INR 100,000 million, and 10 percent of the total going to charging infrastructure construction.
Incentives for 7000 public transport, 55,000 4 wheeled civilian vehicles including hybrid ones, 500,000 tri-wheel vehicles, and 1,000,000 two-wheeled vehicles are planned for this phase.
This strategy also supports roughly 2,700 charging stations across the nation, with the goal of having a minimum of one charging station throughout the city at a three km distance in the major cities, major cities with over a million people, smart cities, and cities in mountainous states. In addition, every 25 kilometers on highways, charging stations will be installed.
3) POLICIES OF THE STATE GOVERNMENT IN REGARD TO EV PROMOTION
The majority of Indian states have completed or are in the process of completing EV policies that complement the country’s national electric mobility policy.
EV policies have been adopted by the states of Madhya Pradesh, Karnataka, Kerala, Uttar Pradesh, Bombay, Delhi, Tamil Nadu, Hyderabad, Uttarakhand, and Uttar Pradesh. States having draft policies include Bihar, Haryana, Himachal Pradesh, and Punjab.
Almost every state’s electric vehicle policy prioritizes two- and 3, wheeler public transit, and job growth.
The policies, however, differ in terms of objectives, supply-side manufacturing incentives, and customer charging station expenditures.
The measures include a goal of having one million electric vehicles on the road by 2022 and 6,000 electric buses on the road by 2025, with road tax along with registration fees waived.
Andhra Pradesh will exempt full road tax and fees on electric vehicles until 2024, as well as provide viability lag time funding in public transportation vehicle purchasing and function, toll-charge exempt status, and free permits and parking for fleet drivers; reduced GST as well as interest-free loans for OEMs.
Karnataka is working on establishing charging stations. By 2024, Andhra Pradesh aims to build 100,000 charging stations; charging would be free, and power taxes will be waived.
Gujarat is promoting EV charging using solar and other forms of renewable energy, and Madhya Pradesh is allowing fuel stations to set up EV charging stations (Maharashtra); promoting EV charging facilities in office and housing complexes and additional incentives against scrappage certificates of old automobiles and promoting EV charging facilities in office and housing complexes and additional incentives against scrappage certificates.
4) PLI SCHEME EXTENDED
Domestic producers are given manufacturing incentives based on incremental income under the Output Linked Incentive system. Foreign corporations are encouraged to open factories in India, while domestic companies are urged to expand or open new factories.
On April 1, 2020, the PLI plan was adopted to give a financial incentive to encourage the local manufacture of cell phones and specified electronic components. Eligible enterprises received a 4–6% incentive on additional sales for quite a period of five years after the foundation year.
The rate of tax for new manufacturing enterprises in India has been decreased to 17%, contrasted to 25% for other businesses.
The PLI system was expanded to include eleven new industries, including Automobiles and Components.
These programs have a total budget of INR 1,960,000 million. The PLI program aims to assist $520 billion in manufacturing over 5 years, with INR 570,420 million set aside for vehicles and auto components and Rs 181,000 million set aside for battery manufacture. The Department of Heavy Industries would complete the process soon.
Guidelines for the vehicle industry relating to PLI.
The PLI plan for advanced chemistry cell battery manufacture was also authorized, as part of this big push for electric cars.
Because battery prices may account for up to half of a vehicle’s overall cost, better battery chemistry offers the potential to save costs while utilizing cutting-edge and safer technologies.
The subsidy would be available to manufacturers that reach 60% additional value within 5 years of the project’s start. The funding is available for any latest tech that emerges during the following ten years.
Tata Chemicals Ltd, the Suzuki Motor Corporate entity Corporation-Denso Corporation consortium, Exide, and Amara Raja are among the companies considering or launching lithium-ion battery manufacturing facilities in Gujarat. Manikaran Power Limited intends to build a lithium extraction plant in Gujarat’s Sanand or Dholera.
5) POLICY ON VEHICLE SCRAPPAGE
In February 2021, the Union Budget unveiled the Vehicle Scrappage Policy. It aims to reduce India’s oil imports by increasing the deployment of new fuel-efficient automobiles; to reduce the environmental and unnecessary noise pollution by removing old, unsafe, and unreliable vehicles; and to increase the availability of reduced recycled inputs for OEMs such as polycarbonate, iron, metal, steel, rubber, and electronics. The car sector has the capacity to enhance its income from INR 4,500,000 million to Rs 10,000,000 million just by implementing this legislation.
There are a few key elements to remember from the policies listed above.
- Emission testing, brakes, and safety equipment will be the primary criteria for vehicle fitness, according to Central Motor Vehicle guidelines.
- From October 1, 2021, rules for fitness testing and scrapping centers will be in effect.
- Beginning in April 2022, government and PSU cars older than 15 years will be scrapped.
- Heavy commercial vehicles will be subject to obligatory fitness testing beginning in April 2023, followed by other vehicles in June 2024.
- Increased fitness certification and test costs for commercial vehicles that are older than 15 years, as well as failure to apply for or get a fitness certificate, will result in de-registration.
- Increased re-registration costs for private cars over 15 years old, as well as de-registration beyond 20 years if judged unsuitable if registration is not renewed
- When a vehicle fails a fitness test or fails to renew its registration certificate, it is classified as an ‘End of Life Vehicle.’ commercial
- Scrap value for an old car may range from 4–6% of either the old or new showroom price of the new vehicle, depending on the scrapping location.
- In exchange for the scrapping certificate, the original equipment manufacturer will provide a 5% discount upon the purchase of a new vehicle.
- State governments will give up to a 25% road tax credit for personal automobiles and up to a 15% discount for commercial vehicles.
- If a scrapping certificate for an old car is obtained, there is no registration charge for new automobiles.
- Encourage public-private partnership in the establishment of a vehicle registration scrapping facility.
- Encourage the state government, business sector, vehicle firms, and others to establish Automatic Fitness Centers on something like a public private partnership basis.
FAQ
The major reason for implementing these policies by the government is to increase the environmental status of India as a whole.
Yes, you can buy any vehicle and get special benefits including subsidies ranging from Rs 20,000 /- to Rs 6,00,000 /-.
As of now, nearly 28 states are trying to implement these policies but 14 of them are already in the phase of implementing these policies.
Even if your vehicle is beyond the age limit the government will give you some incentives while scrapping the car as well as when you buy a new electric car.
Under these schemes, nearly all the states have exempted the tax for a toll as well as the road tax for any new electric vehicle purchased.
Conclusion
The policy will be a primary driver for the growth, with implementation centered on discounts for qualified users, infrastructure building for physical tests of old cars, and a well-connected system of scrapping facilities.
Tata Motors has previously planned the creation of three scrapping sites in Hyderabad, Karnal, and Greater Mumbai.
The following measures, together with increased infrastructure and a change in market acceptability of EVs, would allow India to make a tremendous jump in the Adoption of electric vehicles as a major goal to achieve environmental sustainability.