6 Things India's Forthcoming EV Policy Should Focus On Experts closely watching the space share their expectations of the policy
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India is reportedly planning to draft a new policy to attract electric vehicle (EV) manufacturers and encourage greater investment in the sector. Commerce Minister Piyush Goyal was quoted as saying the same by Reuters last month. Another report by Reuters, published a month before this one, also mentioned that India was working on an EV policy that would cut import taxes for automakers that committed to some local manufacturing, citing sources with direct knowledge of the matter.
The growth in EV sales in India is likely to continue for the rest of the decade, with two-wheelers (e2Ws) and three-wheelers (e3Ws) expected to dominate EV sales in the near future, said a report by KPMG and CII, released in April this year. It also mentioned that EV adoption is expected to see an inflection point once all vehicle segments show significant ownership savings over the vehicles powered by internal combustion engines.
However, the growth in the adoption largely depends on the upcoming EV policy, say experts, who shared with us six things they expect from the policy. "The forthcoming EV policy in India holds tremendous potential to shape the future of the electric vehicle industry in the country. To ensure its success and foster a conducive environment for growth, there are several key elements that should be considered," said Sameer Aggarwal, CEO and founder, Revfin.
They also say that to attract more international EV makers to boost the domestic industry, India's forthcoming EV policy needs to be strategically multifaceted and share the following seven things that the policy should ideally look at.
Improving Charging Infrastructure
First and foremost, the policy should focus on enhancing the charging infrastructure across India, he added. "A robust network of charging stations is critical to alleviate range anxiety among consumers and encourage the adoption of EVs," Aggarwal said. Awareness around climate change, affordability, running costs, subsidies for players in the ecosystem and technology has opened up many opportunities in the areas like charging infra, battery swapping, etc which may soon push many EVs on roads.
"A nationwide, sturdy charging network would be indispensable, designed to allay prevalent concerns over EV range-anxiety and to serve as a dual lure for manufacturers and consumers alike," said Sandiip Bhammer, founder and co-managing partner, Green Frontier Capital. According to a report by NITI Aayog and Technology Information in July last year, if there is sufficient installed capacity of electric two-wheelers and charging infrastructure, then the sale may even reach about 250 lakh units.
Incentives and Subsidies
Additionally, the industry stakeholders expect the policy to provide incentives and subsidies for both domestic and foreign manufacturers to invest in research and development (R&D). "This will promote innovation, drive down manufacturing costs, and ultimately lead to more affordable electric vehicles. To attract foreign EV makers, the policy should offer attractive incentives such as tax benefits and streamlined regulatory processes. This will not only boost foreign investment but also create job opportunities in the EV sector," said Aggarwal.
Around 16 states have finalized their own EV policies that offer incentives. These include Andhra Pradesh, Karnataka, Kerala, Madhya Pradesh, Maharashtra, New Delhi, Tamil Nadu, Telangana, Uttarakhand, Uttar Pradesh, Goa, Gujarat, Meghalaya, Assam, West Bengal, Odisha, and Rajasthan.
"Beyond its envisioned $14 billion investment plan over five years to jumpstart EV manufacturing, the government can sharpen its appeal by offering additional incentives - such as tax concessions, reduced import duties, and access to affordably priced land - to foreign manufacturers, added Bhammer.
Emphasis On Battery Technology
Furthermore, experts also feel that emphasis should be placed on battery technology and recycling infrastructure. Developing a sustainable battery ecosystem will reduce environmental impact and make EVs more environmentally friendly, said Aggarwal.
Collaboration Between Stakeholders and Nations
Experts suggest a collaboration between the government, industry stakeholders, and academic institutions to foster talent and skill development in the EV sector. International collaborations are also key. "Establishing alliances with governments of other countries - similar to approaches taken by countries such as Indonesia, Thailand, and Vietnam - can significantly enhance India's prominence as a burgeoning hotspot for EV manufacturing," said Bhammer.
Allocating funds toward research and development will also lead to innovation and foster India's commitment to pioneering forward in EV technology. "Investments in research and development, particularly in domestic battery manufacturing, are vital to reduce import reliance. A thriving battery ecosystem will not only bolster the EV industry but also create job opportunities," said Akash Gupta, co-founder and CEO, Zypp Electric.
Friendly Regulatory Environment and Policy Clarity
"A regulatory environment which is both streamlined and less bureaucratically dense will facilitate a smoother, more cost-effective establishment process for international manufacturers aspiring to set up facilities in India," said Bhammer. Furthermore, clear guidelines on emissions standards, safety standards, and domestic manufacturing incentives can instill confidence in both domestic and foreign electric vehicle manufacturers. "Policy clarity and consistency are paramount, offering confidence to both domestic and foreign investors. An entire EV ecosystem, encompassing recycling, component manufacturing, and skill development, must be nurtured. Lastly, public awareness initiatives should be integrated into the policy to educate and inspire adoption," said Gupta.