By Nitin Tuli
Does India want to be just a user market of electric vehicles (EVs) or does it aspire to be an EV manufacturing and export hub?
I think this question should be the pivot of the vision of policymakers at the government of India and NITI Aayog.
Promoting EVs in India for reducing carbon emission footprints or bringing down dependence on fossil fuels for saving foreign exchange should not be the only purpose. Instead policy makers should boost the ecosystem of EVs in India by promoting manufacturing, domestic consumption and exports. This will contribute to higher revenue collection through GST, export duties and will propel employment and economic progress in the country.
This can be further elaborated from the example of M&M, Bengaluru, that is manufacturing electric three-wheelers. It has not yet started production of its electric sedan.
This kind of situation could be avoided if it had built the eco-system for building EVs that have demand both in the domestic and International markets.
The COVID pandemic has shown that the world wants an alternative for China in the processed goods industry and India should cash in on this opportunity by creating an EV manufacturing hub.
Globally the demand for EVs is bucking the sales trend of ICE passenger vehicles and is growing against all odds. For Example, in a market like Ireland, the year of uncertainty prompted by Brexit and COVID, the car market decreased by 18%, whereas the electric vehicle segment increased by 9.99%.
Several other European markets also saw triple digit growth in electric vehicle sales in 2020.
The top EV markets in the world are: –
In India, a lot of startups have entered the EV 2-wheeler space but hardly any in the electric 4-wheeler segment though it is on a continuous growth path. The entry of more OEMs and startups in the fray can further expand the EV demand.
The domestic growth of electric 4-wheelers in the pandemic time was at an exceptional 126 %.
Create ecosystem
As the opportunity is hot, the government of India, OEMs, the multinational car makers and component makers should come together and create an ecosystem to make India a manufacturing hub of EVs. This seems to be an achievable task, as many brands of the world’s largest EV manufacturer, China, are not well-known in the developed markets.
To make a success story of EVs in India, it will be important to build a cluster of EV component suppliers. We have Indian pioneers in the lead acid batteries space like Exide Industries, Eveready Industries, Amara Raja Batteries etc, who can also contribute to the plans of making and exporting EV components like Li–Ion batteries.
Epsilon Advanced Materials is the only Indian company to set up a lithium-ion battery manufacturing plant in Bengaluru. Further the oil refineries like Indian Oil are also foraying into hybrid lithium-ion and aluminum-air/zinc-air battery systems manufacturing.
This market is also giving opportunity to Oil & Gas companies like Reliance Industries, similar to Chevron, Shell and BP globally, to foray into the charging infrastructure business.
The number of parts used to build EVs is fewer than for the ICE vehicles, hence building component supplier parks for EVs in India, will not be a big challenge.
As the opportunity is hot, the government of India, OEMs, the multinational car makers and component makers should come together and create an ecosystem to make India a manufacturing hub of EVs.Nitin Tuli
The domestic demand for EV-4 wheelers is rising. If we apply the worldwide ratio of EV volume (4.2%) over the ICE volume in 4-wheelers, the projected electric 4-wheeler market size in India can be 1.13 lakh very soon (taking FY20 volumes size of 4-wheeler at about 2.7 million in India). So the time is right for India to aim at becoming an EV user and manufacturing hub.
Proposals to promote demand for made in India EVs
1. The government shall incentivise contract manufacturing of mainly EV 3-wheelers and e-rickshaws. This will push the EV ecosystem in India.
2. Support manufacturing of EVs for exports.
3. Offer special fiscal rebates for setting up EV manufacturing plants in terms of land allotment, GST and others.
4. OEMs shall do extensive market surveys (domestic and International) and customise the electric 4-wheeler according to the potential customer priorities like factors that will trigger demand: high running range in single charge, loaded features, executive sedan or SUV, initial purchase value etc. Maybe that one of the electric 4-wheelers will become the next people’s car of India.
Europe can be a big market for Indian export, also because there the governments are on roll for preparing a conducive environment for EV adoption like setting up the charging Infrastructure and offering rebates to EV users etc.
5. If OEMs think that innovation in EV can be time and money- consuming, they can try to imitate the highest selling EVs like the tiny budget Wuling Hong Guang Mini EV manufactured by SGMW Motors, Tesla Model S, or ORA R1, so that they can deliver a world-class product.
6. OEMs should adopt an aggressive policy for the marketing and sales of India-made EVs in the European and the US markets.
7. The private sectors or corporates offering EV fleets for their staff shall be officially considered registered as CSR activity by the Government of India.
8. Free parking for EVs across India.
9. Income Tax rebates for the taxpayers who purchase EVs.
10. Modifying building by-laws to compulsorily include EV charging stations at malls, multi storey buildings, townships, cinema halls, big market places etc.
Advantages
It is obvious that for private users electric 4- wheelers offer certain advantages like travelling short distances to get groceries or picking up kids from school; low running and maintenance cost, ease of driving of 100% automatic EVs etc. Implementation of speed restriction on metro roads will further boost EV demand.
Now the onus is on policy makers at the government of India, and the OEMs like Maruti Suzuki, Tata Motors, Mahindra’s, foreign carmakers like Hyundai, MG Motors etc. to work collectively for this bigger plan of making India not just an EV user market but a manufacturing and export hub.
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