At the ongoing Glasgow climate summit, several countries including India, global and local automobile manufacturers and other stakeholders have agreed to work together to move towards zero vehicular emissions by promoting Electric Vehicles (EVs). In India, consumers are increasingly interested in EVs but faster adoption and a transition of the automobile market is still some time away.
The Indian market has come a long way though from two years ago in terms of sales, number of electric vehicle sellers and the level of awareness among consumers.
In 2019, Harsh Vardhan Didwania, an entrepreneur, buoyed by the potential of electric vehicles co-founded a startup, Omjay EV Limited, at a warehouse in an industrial area in Bhubaneswar, Odisha. It is only now, two years later, that Didwania is experiencing the benefits of the rapid transformation of the sector.
“Earlier, we had to create awareness among the consumers about the technology and pursue them to buy such units but now awareness has increased manifold, thanks to the government support in popularising them. If we were getting 50 enquiries per day two years back, now we are getting around 200 such enquiries for the purchase of electric vehicles,” Didwania told Mongabay-India. His startup sells two-wheelers in the EV category under the brand name of EeVe, which has more than 150 outlets across the country from Kashmir in north India to the north-eastern region and Chennai in the southern part of the country.
Like Didwania’s, there are several other startups as well as established automobile companies who are venturing into the emerging electric vehicle market. Sales figures and trends also suggest that the market is picking up.
ccording to the data compiled by the Centre for Energy Finance at the Council on Energy, Environment and Water (CEEW-CEF), the sales of EVs in India have grown exponentially in 2021-22 and are likely to see new heights in the days to come. Currently there are 441 EV manufacturers in India and the total EV sales by the end of 2030 could reach up to 14.8 million, according to the data,
Inter-state policy gap
Though there is a serious push for rapid adoption of EVs, there are several Indian states that are yet to draft policies for EVs or notify their finalised policies. So far, 14 of India’s 28 states have notified their policies for EVs while seven states have made public a draft of such policies.
Manufacturers of EVs claim that in the absence of a notified state policy and without support of the local state government, growth of the sector is hampered.
On the national level, the union government has been supporting the sector with subsidies under the Faster Adoption and Manufacturing of Hybrid and Electric vehicle (FAME-II) scheme.
“Under the FAME-II guidelines, the financial incentives were passed on from the OEMs (original equipment manufacturers) to the customers while purchasing an Electric Vehicle. Earlier it was Rs. 10,000 per Kwh which was again increased recently to Rs. 15,000 per Kwh. This was a hand-holding support from the union government to boost the sector. Meanwhile, several other states came up with their policies of incentives ranging from Rs. 10,000 to Rs. 5,000. But there are also states where there are no policies till date,” an EV manufacturer told Mongabay-India, while requesting anonymity.
But a policy alone cannot help, say experts, who note that even after a draft policy is prepared or a finalised policy is notified, there are other steps that are required to make the provisions of such documents a reality.
“In the first step, a draft proposal is created in states by taking into account the interests of consumers, manufacturers, dealers, battery swapping players, recycling units and others. Later, they are notified. Even after notification of these policies, separate notifications for each proposal are done to give them a legal backup and convert it into a rule. Thus, in states where there is no EV policy or it has not been notified, the EV ecosystem there lacks support from the state government,” a principal secretary level official from one of the eastern Indian states told Mongabay-India.
A close analysis by Mongabay-India revealed that states including Chhattisgarh, Arunachal Pradesh, Sikkim, Nagaland, Manipur and others are yet to take any concrete steps towards this direction. This is when states such as Tamil Nadu and Karnataka, who had announced their EV policies have now reached a stage where they are revising their policies to amend certain provisions after reviewing the implementation of their older EV policies.
The states which have notified their policies or issued their draft policies in 2021 include Odisha, Haryana, Jharkhand, Assam, Rajasthan, West Bengal, Meghalaya, Maharashtra and Karnataka. Among the first states to notify their EV policies were Karnataka (2017), Andhra Pradesh (2018) and Uttar Pradesh (2019).
According to the central government’s data, India is home to 846,132 electric vehicles (November 2021) with two-wheelers and three-wheelers forming the majority of them. Three-wheelers have the highest contribution with 591,859 units among the total EVs in the country.
Data from the Indian government presented in the parliament recently (August 2021) said that several of these states, which notified their EV policies earlier, are now witnessing high sales of such vehicles. For instance, Karnataka, which notified its EV policy in 2017 saw the highest sales of 19,270 units, followed by Tamil Nadu (13,515 vehicles). Uttar Pradesh also reported the sale of a total of 6,022 EVs under the FAME-II scheme of the union government.
Similarly, data suggest that such as Karnataka, Telangana, Delhi and others which started early with their policies are now hosting the largest set of charging stations in their states.
But what worries the experts is the dependency of the manufacturers on imported parts that are critical for achieving large-scale affordable production of such vehicles in the country.
More support is needed for the growth of EVs
Experts emphasise that the financing of EVs, especially in the commercial sector, are only taken care of by a few state policies – Delhi and the draft policy of Bihar.
Abhinav Soman, Programme Associate from the Council of Energy, Environment and Water (CEEW) said, “Some state policies like that of Delhi tries to address the financing challenges in the sector which is important for the commercial EV sector because lending from banks and NBFCs is limited today.”
Soman told Mongabay-India that the new policies being released by other states are now also covering other untouched areas.
“The newer policies coming from other states talk about new aspects that were not touched by earlier policies. For instance, Maharashtra’s policy talks about additional incentives to OEMs that offer buy-back guarantee for EVs and five-year battery warranty, which can help in establishing a secondary market for EVs to ensure better financing in the sector,” he said.
Similarly, Delhi’s EV policy resolves the subsidy disbursal mechanism between energy operator and vehicle owner for vehicles with swappable batteries.
In Telangana, officials claim serious support by the government has helped in better adoption of EVs. “Fleets of major business players such as Amazon, Flipkart, IKEA are now on electric vehicles. There are several small and large scale manufacturers setting up their business in the state. This is because of the hand-holding support of the Telangana government to give an impetus to the sector. Our EV policy helped us to attract more investors and players into the state besides trying to make EVs a popular choice among the consumers,” D.V. Ramakrishna Kumar, Project Director, Telangana State Renewable Energy Development Corporation Ltd (TSREDCO), told Mongabay-India.
“We are now planning to go for further expansions. Work is now going on in our state to ensure that two-wheelers and three-wheelers are EVs acts as feeder services to ensure last mile connectivity to boost usage of public transport to reduce emissions,” he added.
Emailed queries sent to transport commissioners of Karnataka, Tamil Nadu. Gujarat and Maharashtra on the issue by Mongabay-India remained unanswered.
Meanwhile, studies also show that the auto sector is undergoing a transition due to the emergence of EVs. A recent analysis by the World Resources Institute (WRI-India) claimed that although states like Maharashtra and Tamil Nadu had been key hosting areas for the automobile sector in the country, several others states such as Karnataka, Gujarat and Haryana, which have been able to attract major automobile giants in the EV sector, have seen growth of new investors.