Bumps in the way of adoption of EVs in India

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Bumps in the way of adoption of EVs in India

Thursday, 25 February 2021 | Kota Sriraj

Bumps in the way of adoption of EVs in India

EV technology is the future of mobility but dithering Government measures mean that this amazing technology is still stuck in neutral

Rising fuel prices, a nascent electric vehicle (EV) support infrastructure and the recently-announced vehicle scrappage policy amid worrying pollution levels, are creating an unprecedented crisis of sorts for Indians as far as commuting is concerned. These conditions are exacerbated by a creaking public transport system that is bursting at the seams. The seemingly unstoppable rally of fuel price hikes is undoubtedly the most disturbing development so far for a nation that is battling a pandemic-induced economic downturn and dwindling income levels.

In view of a divided and weak Opposition, that repeatedly fails to take up key issues that affect the common man, the Government has mustered enough confidence to dish out 21 fuel hikes in the first two months of the new year, if media reports are to be believed. For many of us, the rise in pollution levels and fuel prices has come as an indication to shift towards EVs or public transport, but in these times of Coronavirus-induced social distancing, jostling in a crowded public conveyance does not seem to be a natural choice.

The finality of making an alternative choice for commuting has been further strengthened by the announcement of the vehicle scrappage policy which makes owning an old vehicle in Delhi-NCR impossible and very costly elsewhere in the country. Though this policy has delighted auto manufacturers as new vehicle demand is expected to soar, the citizens whose budgets have been severely hit by the pandemic may not share the same enthusiasm, as many of their perfectly maintained vehicles will end up in scrapyards. In the midst of this chaos, the EV industry is emerging as the apt solution for all the existent problems, but the Indian EV sector is anything but fully ready to meet the challenge.

The auto sector, which was experiencing a slowdown even before the virus’ outbreak, came to its knees as the full impact of the COVID-19 contagion was unleashed. The Union Budget addressed the sector’s concerns by focusing on reliefs such as tax holidays for EV startups. The setting aside of Rs 2,217 crore for ‘Clean Air’, for 42 urban centres with a million-plus population is also a good move that can spread awareness about the environmental benefits of EVs.

Similarly, the Government’s plan for strengthening the public transport sector under the Public–Private-Partnership model with an outlay of Rs 18,000 crore for operating 20,000 buses is encouraging for the EV industry.

The scheme can help fight air pollution effectively. But inexplicably, this is where the Government’s vision gets blurry as the Budget does not mention any EV-focused initiative or policy, including Faster Adoption and Manufacturing of Electric Vehicles (FAME).

Other expectations, including the ramping up of EV charging infrastructure, enablement of retail financing for EVs and moderation of the inverted Goods and Services Tax (GST) structure along with lowering of taxes on EV input components, including battery, were also not addressed.

The EV manufacturers were hopeful of a firmer policy commitment from the Government, especially in the duty structure pertaining to batteries. The Budget platform could have been used to fix the inverted duty structure for components such as batteries from 18 per cent to five per cent and for charging/swapping infrastructure services, too, from 18 per cent to five per cent. For instance, a lithium-ion battery fitted in an EV attracts 12 per cent GST but it is 18 per cent GST when sold separately. Correction of such issues would have lent enormous confidence to EV manufacturers and provided a much-needed push to the sector. Similarly, lowering of import duties on automotive parts instead of raising them would have had the same positive impact on the spirit of the industry, besides lowering the critical costs of production.

The absence of an aggressive push from the Government for the indigenous EV industry has raised concerns for its future. World leading EV manufacturers such as Tesla are already eyeing the huge potential of the Indian market. In fact, Tesla has already registered itself as an entity in India in Bengaluru, with the intention of manufacturing EV cars. Hyundai’s Kona and Morris Garages’ ZS EV, are already making inroads in the Indian market as we speak. With competition already getting hot, Indian EV manufacturers need more support from the Government in the form of sops, tax holidays for four-wheel EV makers, better GST structures and lower import duties besides robust financing options for the consumers. These measures combined with superior nation-wide charging infrastructure can render fossil fuel cars obsolete, paving the way for their phase-out.

EV technology is the future of mobility but dithering Government measures mean that this amazing technology is still stuck in neutral in the country.

The writer is an environmental journalist. The views expressed are personal.

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