India EV market – Solutions to evident challenges

Mr. Shubhankar Parui-Head of Energy – Product Certification, BSI India

Electric vehicles are currently a hot topic all over the world. Everyone, whether in the United Kingdom, Europe, India, or the Middle East, is concerned about global warming and is working toward carbon neutrality or decarbonisation or zero emissions for long-term sustainability. The demand for electric vehicles was initially low due to limitations such as speed, battery range, load carrying capacity, charging infrastructure, and power. However, with advancements in EV technology and the effects of global warming, electric vehicles are becoming more acceptable and are expected to grow exponentially in the future. The country’s government will play a key role in promoting this transition from fossil fuels to cells and batteries, such as how it promotes technology, incentivizes consumers to accept it, and builds infrastructure. Previously, we only saw electrification in the two-wheeler segment. However, the technology is now found in three-wheelers, passenger cars, buses, and fleet vehicles. Without a doubt, technology has had a significant impact on the automobile industry, and companies and government bodies are looking into the possibilities.

The Indian Electric Vehicle Market was valued at USD 1434.04 billion in 2021 and is expected to reach USD 15397.19 billion by 2027 registering a CAGR of 47.09% during the forecast period (2022 – 2027) by Mordor Intelligence. India’s electric vehicle market is expected to grow at a CAGR of 90% in this decade to touch $150 billion by 2030, a report by consulting firm RBSA Advisors, stated. So we can forecast that the market size is massive in India.

Due to the shutdown of manufacturing facilities and lockdowns caused by the COVID-19 pandemic, domestically produced electric vehicles were limited. However, as restrictions were eased, EVs saw an uptick in popularity as consumers gravitated toward more affordable eco-friendly transportation, which was greatly helped by government incentives. Two-wheelers (scooters, motorcycles) and three-wheelers (autos and rickshaws) dominate India’s automotive industry, and they play a significant role in the country’s last-mile mobility. Government emphasis is growing, as is the focus of private and public sector partnerships to improve the country’s electric vehicle ecosystem. Major OEMs are increasing their investments and product launches in the country, as well as their focus on localising supply chain facilities, to create a positive market outlook. Furthermore, the level of market maturity in India differs by state and is influenced by factors such as demography, income levels, regulatory landscape, and urbanisation. The state of Uttar Pradesh, for example, has seen a significant uptake of electric two-wheelers despite having one of the lowest urbanisation rates in the country. Maharashtra, on the other hand, has the highest penetration of electric three-wheelers and passenger automobiles due to its greater urbanisation rate. Delhi is home to the largest electric commercial vehicle fleet due to a higher demand for electric buses and trucks.

Indian government is looking very promising about driving the EV industry for the country growth, lower dependency on crude oil imports and decarbonisation. Hence for that, they are incentivising the consumer with their income tax slab. Cars for personal use are considered luxury products under Indian tax laws, therefore salaried professionals do not receive any tax benefits on auto loans. In order to encourage the use of electric vehicles in India, the government created a new section that exempts EV owners from paying taxes a total tax exemption of up to Rs 1,50,000 is available under section 80EEB. In previous years, the government had cut the GST component on electric vehicles to 5%. Four-wheel EVs can earn a maximum subsidy of Rs 1.5 lakh under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME-II) programme, while two-wheelers can get a subsidy of up to 40% of their purchase price.

In ‘The Union Budget 2022’, the new updates for the industry was introduction of the Battery swapping policy. In her Budget speech to the Lok Sabha on Tuesday (Feb 1, 2022), Finance Minister Nirmala Sitharaman announced that the government will introduce a battery swapping policy to encourage the use of EVS in the country due to space constraints for charging stations, and that interoperability standards will be developed. The measures are in line with the government’s target of making electric vehicles at least 30% of private car sales by the year 2030, a step that will help reduce pollution as well as lower India’s dependency on crude oil imports. Along with the 30% target for private cars, the government has identified a 70% target for commercial vehicles to be electric and 40% of buses and 80% of two- and three-wheelers to run on electric by 2030. The battery swapping policy is expected to give a boost to e-commerce delivery and three-wheeler transport service sector as both these categories are bound by time constraints, making swapping a discharged battery for a fully charged one more viable than on-spot recharging that can take hours. So, in general, The Union Budget 2022 did show its intent on promoting cleaner mobility.

Going forward, standardization and certification will be essential in the shift of the ecosystem from fossil fuels to batteries for the safety and performance of electric vehicles, batteries, and EV infrastructure. We’ve seen several cases in the past with EVs catching fire, batteries exploding, fast charging EV chargers catching fire, and so on. EVs can be charged at home or at a charging station, but safety is paramount and should not be compromised in any way. It was discovered that there are no Type 5 certification programmes in India, which include comprehensive type testing, factory assessment, yearly audits, and audit testing to ensure that product quality is maintained. So policy should be formulated or expected in coming time for the safety of the consumers.

In May 2021, the government launched a Manufacture-Linked Incentive Scheme (PLI) for ACC Battery Storage Manufacturing, which aims to boost domestic battery manufacturing and reduce reliance on imports. This will offer the required infrastructure for the EV industry, substantially decreasing the cost of EVs. Due to the risk inherent in handling and applying batteries, again, certification and standardisation will be playing significant role in the development of battery swapping policy.

Long way to go but India is going at a good pace to meet its decarbonisation goals and Prime Minister Narendra Modi’s government plans to reduce carbon emissions by up to 35% by 2030 as part of a commitment under the Paris Climate Agreement.