Making Public-Private Partnerships Successful in India's EV Sector Experts share key challenges that need to be solved

Public-private partnerships (PPPs) are crucial for driving India's electric vehicle (EV) adoption. The private and public sector is today equally invested in mitigating the challenges of air pollution and rising oil prices and EVs are by far the best solution to address both.

While the public sector can provide policy support to improve EV infrastructure and drive innovation, the private sector can offer technology, increase awareness and drives sales. However, private companies and government players are often at loggerheads.

For instance, the Central Government's recent decision to reduce the subsidy under the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME India) scheme on electric two-wheelers has elicited some negative reactions from the private industry.

In its recent notification, the Ministry of Heavy Industries said that it is reducing the subsidy on electric two-wheelers to INR 10,000 per kWh from the existing INR 15,000 per kWh and the maximum subsidy cap from 40 percent to 15 percent. While there is no denying that India's EV transition journey so far has been aided by the FAME 2 subsidy, which resulted in a huge surge in sales of electric two-wheelers (E2Ws) this move, the industry fears, may lead to a huge increase in their prices and thereby a drop in sales.

In fact, since the news of the government moving in the direction of cutting or removing subsidies started to float, there has been a decline. According to the Vahan portal, since April 2023, E2Ws sales have been under pressure and have been falling after recording the highest monthly sales in March 2023 at 85,793 units. The sales of E2Ws stand at around 39,000 units in May so far, said the portal.

What will make PPPs successful in EVs?

Expectations from startups

"The success of PPPs in the EV market hinges on the collaboration between private companies and government players. To ensure that PPPs are successful in this sector, the government can play a critical role in supporting EV growth," said Akash Gupta, CEO and co-founder, Zypp Electric. (we spoke to Akash before FAME 2 subsidy reduction was announced).

Subsidies and support to OEMs are the two main expectations from the startup. "This can be done by giving them access to low-cost land and energy to set up EV manufacturing facilities. In addition, keeping the GST low on EV buying and EV-led delivery services can encourage more consumers to switch to EVs, leading to a significant reduction in carbon emissions and contributing to a greener environment," he added.

Experts also feel that government has to play a key role in spreading awareness about the rights and wrongs of EV adoption. For instance, to support the growth of the EV market, the government can take a crucial step in promoting EV charging via renewable sources. "By incentivizing the installation of charging stations powered by renewable energy sources, the government can encourage the use of clean energy in the transportation sector," Gupta added.

Startups feel that the government can also play a huge role in EV financing by collaborating with financial institutions and providing incentives to finance the purchase of EVs.

Chetan Maini, co-founder and Vice Chairman, SUN Mobility believes that private companies and the government today are working well together. "When I think of the last 20 years of doing this, I see things changing. I see states coming forward. I wouldn't say there are no challenges. Certain policy abnormalities are there. But in general, you see a very positive side of the government. You're also seeing states betting on electrification. Delhi is at the forefront of this, Tamil Nadu from a manufacturing point and Bangalore from an adoption point of view, so on and so forth," he said.

There is a lot more to be done, but I do believe a fair bit of positive steps has happened here, he added.

In addition to that, it is also pertinent to ensure that PPPs are successful not only immediately but for years to come. Governmental authorities and the private sector will need to collaborate together on a long-term basis to ensure the success and sustainability of PPPs. "Policies need to be tweaked from time to time to ensure that investments can be attracted on a long-term basis. Recent hurdles as seen in the case of the e-buses program, will also need to be ironed out. It is clear that strong hand-holding between the government and the private sector is the need of the hour, in the PPP sector. This will help ensure decarbonization of urban mobility and achieve ease of mobility, along with safety for all citizens, in the coming few years," said Mustafa Wajid, Chair, Future of Mobility and Transport Panel, IET India.

As India moves to its target of net zero emissions by 2070, EV will have a major role to play. Experts feel that this target cannot be achieved by either just the government or industry, but will need both of them to work in tandem to provide a far larger impact.

"The role of government in India is moving increasingly to an enabler role and a provider of infrastructure for large corporates and startups to build and operate solutions," said Padmaja Ruparel, co-founder of IAN and founding partner of IAN Fund.

She also shared the following key areas that need to be solved :

• The infrastructure for both manufacturing and operating EVs needs to be established. The government will play a key role to provide the land, policy enablers, initial funding mechanisms
• Prioritizing innovation and R&D is key. While the government can breed innovative solutions in their labs, we are already seeing several startups emerging out of these labs which are working on new technologies, such as solid-state batteries, wireless charging, and vehicle-to-grid (V2G) systems: all of these need access to private sector funds, mentoring & markets.
• Building infrastructure for EVs, such as charging stations, etc is essential but this is a high capex infrastructure, which needs to access around the country. This is exactly where the government steps in. But then the private sector steps in with the vehicles, technology solutions, providing services, etc. on a financially viable basis, as companies do need to look at profits.
• New industries with innovative solutions are always ahead of regulations. As the EV industry grows, there will be a need for regulatory frameworks. The most effective way of forming regulations will be built by the government's "enabler" perspective with inputs from the industry. This will enable the most practical regulatory framework which can accelerate us to achieve the targets set out by India's Hon. Prime Minister in Glasgow.