India’s E-Vehicle (EV) Policy

General Studies Paper -3

Context: The government plans to expand its Electric vehicles (EVs) policy to include retrospective benefits for prior investors.

• Previously, incentives were available only for new local facilities established within three years of approval.

About Electric vehicles (EVs)

• Electric vehicles (EVs) have gained significant traction in recent years as a cleaner and more efficient alternative to traditional gasoline-powered cars.
• With advancements in battery technology, a growing network of charging infrastructure, and increasing consumer demand, EVs have become a viable option for many drivers around the world.
• Significant investor support is essential to tap into the $100 billion-plus EV opportunity in India.
• India, being the third-largest automotive market in the world, could potentially “lead the global transition” from internal combustion engine (ICE) to decarbonised electric counterparts.

 E-Vehicle policy

• The government in March 2024 approved the E-Vehicle policy to promote India as a manufacturing destination for EVs and attract investment from reputed global EV manufacturers.
• Focus: Enhance access to latest technology, strengthen the EV ecosystem, and promote competition among players.
  • Aim to lower production costs and improve EV economics for Indian consumers.
  • Mandated 50% value addition in manufacturing to occur domestically within five years.
  • Reduced import duty on completely built units (CBUs) with a cost, insurance, and freight (CIF) value of $35,000 from 70%-100% to 15%.

Challenges and Issues

• India faces structural cost disadvantages in certain components.
• After-sales service is a major concern for EV customers, impacting the scalability of business models.
• Foreign investments may not always deliver desired outcomes

Comparison at Global

• India’s EV policy aligns with incentives provided in the U.S., China, and Europe for EV manufacturing.
  • Electric cars in Europe and the U.S. remain 10%-50% more expensive than combustion engine vehicles.
  • Both regions import 20%-30% of their EV battery demands, highlighting the need for integrated production.

Other related steps

• The Indian government has set a target to achieve 30 percent electrification of the country’s vehicle fleet by 2030, and has introduced several incentives and policies to support the growth of the EV industry.
• The industry was given a major boost in the FY24 Union Budget for the production of electric vehicles, adoption of hydrogen fuel, and embracing changing technologies.
• In the 2023-24 Union Budget, Finance Minister Nirmala Sitharaman announced a budget allocation of INR 35,000 crore for crucial capital investments aimed at achieving energy transition and net-zero targets by 2070.
• The government has already launched initiatives such as the Faster Adoption of Manufacturing of Electric Vehicles Scheme – II (FAME – II) and the Production Linked Incentive Scheme (PLI).

Conclusion and Way Forward

• India’s electric vehicle market is poised for significant growth in the coming years.
• With supportive government policies, increasing consumer awareness, and advancements in technology, the country is well positioned to transition towards a more sustainable and eco-friendly mode of transportation.
• As the demand for EVs increases, it presents a tremendous opportunity for both local and international companies to invest in and contribute to the growth of India’s EV ecosystem.
• Investors should evaluate potential assets based on competitive advantages, market capabilities, customer feedback, talent, and supply chain strategies.
• There is a need to strengthen domestic players to create capabilities for critical components and encourage foreign automakers to utilize local suppliers.
• Streamlined Enumeration Process: Enumerators should be provided with a specific list of castes (based on the finalised draft).
  • The questionnaire should ask for sub-caste names, caste names, larger caste groups, and caste surnames of respondents.
  • Internet-enabled handheld devices preloaded with caste details will make enumeration easy and foolproof.
• Legal Review of 2021 Judgment: Interested States should move the apex Court to review its 2021 judgement.
  • Implementing OBC reservation based on 1931 Census data and EWS reservation without empirical data is farcical. The next Census must enumerate caste.

Conclusion

• A caste census is not merely a capitulation to identity politics; it is a necessary step toward a more equitable and just society. It is a reflection of our commitment to social justice and equitable development.
• Amending the Census Act, 1948, to make caste enumeration mandatory would be a significant stride in this direction.
• Peter Drucker famously said, “Only what gets measured gets managed.” This adage holds true when it comes to addressing the problems faced by historically discriminated social groups.
  • Whether it’s based on caste, race, religion, gender, or disability, collecting data on group identities is essential for informed policy-making and inclusive development.