Electric Vehicle industry in India: Regulations and road ahead

By - King Stubb & Kasiva on October 25, 2022

Technological advancements have been reshaping the automotive manufacturing industry in India. Indian automotive industry is now one of the fastest growing markets in the world and accounts for a large share of the Indian economy, a broad range of stakeholders and a multifaceted reach. India’s potential to create an electric mobility paradigm could have a significant impact domestically and globally. Electric Vehicle companies have realised this potential and have started adopting advanced manufacturing techniques to promote e-mobility. It could very well be predicted that in future the electric vehicle industry will significantly evolve, probably better than the current automobile to combat environmental issues.

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The Indian electric vehicle market was estimated to be worth USD 7,025.56 million in 2021, and is anticipated to have grown to be worth USD 30,414.83 million by 2027, registering a CAGR of 28.93% in terms of revenue (2022-2027) . Due to the rapidly rising mild-hybrid electric vehicle adoption rate year over year, favourable electric vehicle legislation, and enhanced government activities across India, the market for electric vehicles is experiencing significant growth.

In the midst of its electrification missions, the Indian government has made conscious efforts to support the growth of electric vehicle companies in India through various policies and initiatives. In this article, we will discuss the key policies adopted by the government in order to support the electric vehicle industry in India and the incentives available for EVs manufacturing companies in India.

KEY POLICY INITIATIVES

The Indian government has always been at the forefront of developing national EVs adoption strategies. The following list of government initiatives to promote EVs adoption includes:

  • FAME-I Scheme [1stApril, 2015 – 31stMarch, 2019]: Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME India) Scheme was developed by the Department of Heavy Industry in 2015 with the goal to promotethe production of electric and hybrid vehicle technologies and ensuring its sustainable growth.
  • FAME-II Scheme [1st April 2019 – 31st March 2024]: Phase-II of the FAME Scheme attempts to create demand for Electric Vehicles (xEVs) in the country. It puts great emphasis on providing economical and environment-friendly public transportation options for the masses. In addition to the above, the creation of Charging Infrastructure will also be supported under this Scheme.
  • PLI Scheme [Duration of 4 - 6 years]: The Production Linked Incentive (PLI) Scheme for the Indian Automobile and Auto Component Industry was approved by the Government of India in order to improve India's manufacturing capabilities for Advanced Automotive Products (AAT). Its primary objectives are to overcome economic constraints, generate economies of scale, and establish a reliable supply chain for AAT products. This is scheme also predicted to generate employment and facilitate the Automobile Industry in India to move up the value chain into higher value-added products.
  • PLI Scheme for National Programme on Advanced Chemistry Cell (ACC) Battery [Approved ACC battery storage manufacturers are required to establish a production facility under the battery plan within two years]: With a financial commitment of Rs. 18,100 crores, the government approved the PLI-ACC Scheme to achieve a production capacity of Fifty (50) Giga Watt Hours (GWh) of ACC for improving India's Manufacturing Capabilities. This scheme aspires to favour the EV ecosystem and energy storage market as it will support the demand for EVs and renewable to attract investment in this sector. The scheme further aims to level the cost of battery production in India.

INCENTIVES AVAILABLE FOR EV MANUFACTURING 

The Production Linked Incentive (PLI) programme is primarily focused on electric vehicles (EVs) and hydrogen fuel cell cars, as well as their parts. Champion OEM Incentive Scheme and Champion Component Incentive Scheme are two distinct schemes within it.

A programme with a sales value link, the Champion OEM Incentive is available for all battery electric vehicle (BEV) and hydrogen fuel cell vehicle sectors. This component offers a financial incentive that ranges from 13 to 18%. Any other innovative automotive technology vehicle listed by the Ministry of Heavy Industries is also covered.

ADDITIONAL MEASURES TO SUPPORT/PROMOTE EV INDUSTRY IN INDIA 

The following are some of the government's several initiatives to encourage electric vehicle use in India and to assist electric vehicle companies in India:

  1. The GST on electric vehicles including both 2 wheelers and 4 wheelershas been decreased from 12% to 5% and from 18% to 5%, for chargers and charging stations, respectively.
  2. The Ministry of Power has issued a notification regarding charging infrastructure standards for private charging at homes and workplaces.
  3. The Ministry of Road Transport &Highways(MoRTH) declared that the battery-operated vehicles will receive green license plates and will be exempted from permit requirements.
  4. The Ministry of Road Transport and Highways [MoRTH] has issued a letter advising states to exempt EVs from road taxes, lowering the initial cost of EVs.
    5.Technology Platform for Electric Mobility (TPEM), which will be principally financed by the Department of Heavy Industry (DHI), will create technologies and products, give some of the electric mobility technologies a competitive edge globally, and sufficiently boosts industrial technological capabilities.
    6.The Battery Swapping Policy was one of the budgets 2022's major announcements. Simply put, a battery swapping station will enable an electric vehicle (EVs) owner to quickly swap out a dead battery for a charged one.

REGULATIONS ISSUED BY OTHER MINISTRIES 

One of the essential needs for boosting the adoption of electric vehicles in India is the availability of efficient charging infrastructure. In order to hasten the development of public EVs charging infrastructure across the nation, the Ministry of Power has released "Charging Infrastructure for Electric Vehicles - Guidelines and Standards ," which details the duties and responsibilities of key stakeholders at the Central & State level. 

STATE ELECTRIC VEHICLE TARIFFS 

The energy and demand charges for EVs charging, being the two components of the tariff, have been observed to vary among states. Each state is tasked with determining tariffs for various customer groups. Reviewing the state-wise tariffs reveal that most states have EV tariffs that range from INR4 to INR6/kWh.

CONCLUSION 

Electric Vehicle Industry in India is growing to a marked extent. The regulations and incentives introduced by the central and state governments, clearly establish India’s intention to promote EVs and develop India into a manufacturing hub for EVs. Even public, these days is looking for alternativesources to save on their travelexpenses, and the Indian EVs industry, gradually gaining momentum comes to their rescue amidst rise in crude oil costs.

However, a widespread switch from internal combustion engine (ICE) vehicles to electric vehicles (EVs) necessitates the expansion of infrastructure facilities, such as charging stations, and automobiles that have a greater range (KM range with a single charge). Overall, a balance would need to be struck, which would not only catalyse a homegrown EVs ecosystem but also lead the way towards sustainable growth and development.

FREQUENTLY ASKED QUESTIONS

Is EV conversion legal in India?

EV conversion is legal in India. ARAI has set out clear technical requirements for the approval of EV Retrofitting Kits. In accordance with Rule 126 of the Central Motor Vehicle Rules of 1989, the Government of India has notified ARAI as a leading Testing and Certification Agency. The government has sought help from ARAI in developing automobile standards and laws. 

What is PLI scheme for EV?

The PLI Scheme for the EV sector aims to remove the cost barriers that the industry faces when manufacturing product incorporating Advanced Automotive Technology in India. The incentive system will encourage business to make new investments in the domestic global supply chain for utilising Advanced Automotive Technology products.

Who is eligible for fame subsidy?

The scheme outlined the requirements for an electric two-wheeler to be eligible for this subsidy that required minimum range of 80 km and a minimum top speed of 40 kmph. The subsidy amount for battery-powered two-wheelers has been increased under the recently modified policy.

What is ARAI and what is its significance for EVs in India?

The Ministry of Heavy Industries, Government of India, has partnered with the Automotive Research Association of India (ARAI), an independent organisation, to provide reliable, safe, and environmentally friendly automobiles.
To support India's electric vehicle ecosystem, they are creating locally produced electric vehicle chargers. Infrastructure for charging electric vehicles is crucial for their promotion.

Also read our Article on Electricity Rules 2021: Safeguarding Clean Energy


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