- FAME India scheme
- About NEMMP 2020
- Significance of India’s ambitious electric vehicles target
- Challenges ahead for this ambitious target
- Vast opportunity
India’s ambitious electric vehicles target [Mains Article]
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GS (M) Paper-2: “Government policies and interventions for development in various sectors and issues arising out of their design and implementation.”
GS (M) Paper-3: “Infrastructure: Energy”
- The Union government recently announced that only electric vehicles (EVs) will be sold in India from 2030.
- The current National Electric Mobility Mission Plan (NEMMP) has set a sales target of only 5-7 million EVs and hybrid electric vehicles annually by 2020.
- On the other hand, the Indian automobile market, which includes two-, three- and four-wheelers, is expected to clock an annual sales figure of around 23 million by 2030.
- Replacing these with EVs would require a significant push as far as vehicle-charging infrastructure and batteries are concerned.
FAME India scheme
- With an aim to promote eco-friendly vehicles, the government had launched the FAME India scheme in 2015 offering incentives on electric and hybrid vehicles of up to Rs 29,000 for bikes and Rs 1.38 lakh for cars.
- FAME India – Faster Adoption and Manufacturing of Hybrid and Electric vehicles in India – is a part of the National Electric Mobility Mission Plan.
- The scheme envisages Rs 795 crore support in the first two fiscals starting with the current year.
- It is being administered by the Heavy Industries Ministry.
About NEMMP 2020
- National Electric Mobility Mission Plan (NEMMP) aims to achieve national fuel security by promoting hybrid and electric vehicles in country.
- It has set ambitious target of 6-7 million sales of hybrid and electric vehicles year on year from 2020 onwards.
Significance of India’s ambitious electric vehicles target:
- There are almost 140 million vehicles in India and vehicular pollution alone contributes to the 30 to 35 per cent of the total pollution. Electric vehicles (EVs) will positively change this scenario.
- India is eager to reduce its heavy dependence on oil imports – something which weighs heavily on the country’s current account deficits.
- Even though the energy department clarified that its target was “aspirational”, its willingness to set a time frame shows the government is focused on delivering on it. The time for this could not be more appropriate.
- The electric vehicle market has reached an inflection point. Sales of electric cars grew at an exponential pace of 94% between 2011-15 the world over, led predominantly by the US, Europe and China.
- In fact, a Stanford University study has predicted that all new vehicles sales in 2025 will be electric, and fossil fuel-based vehicles would have vanished by 2040.
- The growth in the electric vehicle market will change the landscape of the Indian automobile industry significantly. It will also have a big impact on the overall Indian economy.
Challenges ahead for this ambitious target:
- The key challenges to adoption of electric vehicles in India is primarily due to low penetration of charging infrastructure and perceived higher initial cost of acquisition. The government would need to build more charging points and lower the cost of electric vehicles.
- Because of the number of infrastructural additions and changes required, replacing gasoline cars with electric vehicles is expected to be a longer drawn-out affair as the market will take time to adjust.
- As far as affordability is concerned, when compared to fossil fuel vehicles, electric vehicles still seem to have a higher cost of acquisition, even though the total cost of ownership is substantially lower.
- The biggest expense that goes into producing electric cars in India are the batteries. These are largely being imported from countries such as China at the moment because there is not a critical mass of electric vehicle production.
- India’s move to electric vehicles will open diversified opportunities for downstream industries such as lithium-ion battery packs, electric traction motors and charging infrastructure.
- With countries across the world, including the UK and France, announcing plans to move to electric vehicles an only future, the global demand for these products is likely to surge in the coming years.
- While some of it will be met by the existing producers, there will be opportunities for new entrants, which will help create new jobs. India, with its well-established auto sector and relatively lower labour costs, is in a unique position to become a leading player.
- Affordability will be a key success factor in India, especially in the small car segment.
- Targeted customer subsidies in the form of lower registration tax, road tax, and even lower GST rates in the formative years would go a long way in kick-starting adoption.
- India’s pre-eminent position in two-wheelers, small cars, light commercial vehicles and buses is a natural advantage, given that these are the segments most amenable to a large electric vehicle share.
- India can become a dominant global hub for electric vehicles with concerted effort from all stakeholders.
- Lower GST (goods and services tax) on electric vehicles at 12%, in comparison with 43% for hybrid vehicles, is also a step in the right direction.
- The future of electric vehicles looks quite promising but that long-term government policy on electric vehicles is very much required and the lowest possible taxation is needed to boost the industry.