India's new electric vehicle policy puts sector on a high gear

India's new electric vehicle policy puts sector on a high gear
The penetration of EVs has increased significantly in the last five years across India, and several start-ups have emerged in the segment with new products and technologies alongside the conventional car manufacturers.Courtesy: Getty Images

Slew of incentives from various state governments is welcome news for both supply and demand side.

With India’s stated aim to become a major name in the global electric vehicle market, and several carmakers in the country working on EVs, the announcement of new electric vehicle policies and slew of incentives from various state governments in India is welcome news for the industry.

Indeed, the penetration of EVs has increased significantly in the last five years across India, and several start-ups have emerged in the segment with new products and technologies alongside the conventional car manufacturers. Although the passenger vehicle segment has witnessed a low penetration with only a few OEMs launching their products in the space, the two-wheeler and three-wheeler segments have seen a rise of the EVs in larger numbers driving the green mobility movement in India.

Strong initiatives

And the government’s manufacturing initiatives and incentives have helped strongly.

“Until now, 2021 has proved to be a key year with regards to vehicle electrification (EV) in India. After revision of the centre’s Faster Adoption and Manufacturing of Electric Vehicles (FAME) phase II policy last month and similar revision/enhancement of respective state EV policies by Gujarat, Karnataka, Andhra Pradesh and Tamil Nadu, Maharashtra has now announced a new EV policy for the state,” said Bakar Sadik Agwan, senior automotive consulting analyst at GlobalData.

“The new Electric Vehicle Policy (EVP) aims a full-electric share of 10 per cent in new vehicle registrations by 2025 (10 per cent for two-wheelers, 20 per cent for three-wheelers and 5 per cent for four-wheelers). The policy is aimed to improve Maharashtra’s position with regards to the production, sales of EVs and network of charging infrastructure. The policy is set to benefit both supply and the demand side,” he said.

The penetration of EVs has increased significantly in the last five years across India, and several start-ups have emerged in the segment with new products and technologies alongside the conventional car manufacturers.
Delhi Deputy Chief Minister Manish Sisodia inaugurates new electric vehicle charging station at Patparganj. Added subsidies from the government for local manufacturing of EVs and related components have attracted new investments into the sector.
Delhi Deputy Chief Minister Manish Sisodia inaugurates new electric vehicle charging station at Patparganj. Added subsidies from the government for local manufacturing of EVs and related components have attracted new investments into the sector.Courtesy: Getty Images
The new state policy, which is over and above the FAME II, will further make electric two-wheelers cheaper with its additional demand incentives – leading to a significant boom in electric two-wheeler sales.

Bullish on targets

That’s a view corroborated by captains of the industry as well.

“We expect the shift towards EV mobility in the country to gain more traction in the coming few days,” said Naveen Munjal, MD of Hero Electric. “The policy that aims to convert 10 per cent of their overall EVs by 2025 and install 1500 charging stations across the state, will only make EVs an attractive option for mobility in the state. Hero Electric is committed towards such initiatives, and we are elated to further expand our reach with government support. We are extremely bullish about achieving our targets of 1 million scooters on the road over the next few years.”

With added subsidies from the government for local manufacturing of EVs and related components such as batteries attracting new investments in the state, the sector has garnered the attention of new entrepreneurs and investors as well.

“On the demand front, the slew of incentives announced will be growth catalysts for EVs. These include exemption from road tax and registration charges, demand incentives based on kWh capacity, electrification targets for public transports, government vehicles, and the high-growth last-mile delivery segment,” Agwan said.

Driving demand

The recent revision in FAME II increased the demand incentives on two-wheelers by 50 per cent. The new state policy, which is over and above the FAME II, will further make electric two-wheelers cheaper with its additional demand incentives – leading to a significant boom in electric two-wheeler sales.

“The policy also aims to strengthen the charging network across four major highways in the state with nearly 2,500 new charging stations which would promote intra-state EV transportation in Maharashtra. Prima facie, it seems that the electric two-wheelers and public transportation will be the key beneficiaries of the newly announced policy,” said Agwan.

With a significant chunk of three-wheeler in the state already running on cleaner CNG and passenger EVs market still in a budding stage, prioritizing two-wheelers and public transportation electrification will also help the government to achieve its electrification targets.

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