In view of the increasing environmental concerns associated with fuel-based mobility, the government has been promoting e-mobility, which has zero tail pipe emissions. In this regard, a policy framework has been developed and a plethora of other initiatives have been taken to create an e-mobility ecosystem in the country.
In 2011, the central government approved the National Mission on Electric Mobility (NMEM), subsequent to which the National Electric Mobility Mission Plan 2020 (NEMMP, 2020) was unveiled in 2013. The NEMMP, 2020 provides the vision and road map for faster adoption of electric vehicles (EVs). As a part of the NEMMP, 2020, the Department of Heavy Industry (DHI) formulated the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India (FAME India) scheme in 2015, to promote electric and hybrid vehicle technologies. Further, various guidelines and incentives have been rolled out by the government for promoting green mobility.
Indian Infrastructure takes a look at the key policy initiatives taken to increase the uptake of e-vehicles…
FAME I
Phase I of the FAME scheme was implemented for a span of two years, starting March 2015 (later extended till March 2019) with an outlay of Rs 8.95 billion. It was centred on four key areas – demand creation, technology platform, pilot project and charging infrastructure. In the first phase, about 0.28 million EVs and hybrid vehicles were supported by way of demand incentives amounting to Rs 3.59 billion. The DHI sanctioned and deployed 425 electric and hybrid buses in various cities at a total cost of about Rs 2.8 billion. For charging infrastructure, the government sanctioned about 520 charging stations/infrastructure for Rs 0.43 billion.
Further, the DHI entrusted public sector undertakings (PSUs) such as Bharat Heavy Electricals Limited and Rajasthan Electronics and Instruments Limited with the task of making three expressways – Delhi-Chandigarh, Delhi-Jaipur and Mumbai-Pune – EV-friendly by setting up charging infrastructure at regular intervals.
FAME II
Approved by the cabinet on March 1, 2019, FAME II is an extension of FAME I. The scheme will be implemented through three verticals – demand incentives, establishment of a network of charging stations and administration of the scheme, including its publicity. The key focus area of the scheme is electrification of public transportation, including shared transport.
FAME II entails a total outlay of Rs 100 billion, which is about 10 times more than the Rs 8.95 billion that had been set aside for the first phase. It will be implemented over a period of three years, from 2019-20 to 2021-22. Component-wise, the scheme envisages an expenditure of Rs 85.96 billion on demand incentives, Rs 10 billion on charging infrastructure and Rs 0.38 billion on administrative expenditure. Vehicle-wise, the scheme aims to provide demand incentives of Rs 35.45 billion for e-buses, Rs 25 billion for e-three wheelers, Rs 20 billion for e-two wheelers, Rs 5.25 billion for e-four-wheelers and Rs 0.26 billion for 4W strong hybrid vehicles. Overall, the scheme aims to incentivise the purchase of 1 million e-two-wheelers, 0.5 million e-three-wheelers, 35,000 e-four-wheelers and 7,090 e-buses.
As of September 15, 2020, about 27,715 EVs had been supported under FAME II, by way of demand incentives amounting to about Rs 0.95 billion. Further, the DHI has sanctioned 5,595 e-buses – 5,095 e-buses to 64 cities/ state transport corporations for intra-city operation, 400 e-buses for intercity operation, and 100 e-buses for last-mile connectivity to the Delhi Metro Rail Corporation’s. This involves a government incentive of around Rs 28 billion.
The scheme also proposes the establishment of about 2,700 charging stations in metros, smart cities, Tier II cities and hilly regions. On September 25, 2020, the government sanctioned 670 e-buses in Maharashtra, Goa, Gujarat and Chandigarh, and 241 charging stations in Madhya Pradesh, Tamil Nadu, Kerala, Gujarat and Port Blair. In addition, the government has extended the validity of certificates for availing of benefits under FAME II for all approved EV models by three months till December 31, 2020.
In a recent development, on October 12, 2020, the DHI floated an expression of interest for inviting proposals from government organisations, central and state public sector units (PSUs), state-owned discoms, oil PSUs and other public and private entities to build and operate public EV charging infrastructure on the Mumbai-Pune, Ahmedabad-Vadodara, Delhi-Agra, Bengaluru-Mysuru, Bengaluru-Chennai, Surat-Mumbai, Agra-Lucknow, Eastern Peripheral, and Hyderabad-Outer Ring Road expressways. Proposals have also been invited for highways such as Delhi-Srinagar, Delhi-Kolkata, Agra-Nagpur, Meerut-Gangotri Dham, Mumbai-Delhi, Mumbai-Panaji, Mumbai-Nagpur, Mumbai-Bengaluru and Kolkata-Bhubaneswar.
Guidelines for charging infrastructure
A robust charging infrastructure is crucial for the wider adoption of EVs. To this end, in October 2019, the Ministry of Power (MoP) released revised guidelines for EV charging infrastructure that superseded the December 2018 guidelines. The guidelines envisage the setting up of at least one charging station in a grid of 3 kmx3 km in cities, one charging station at every 25 km on both sides of highways and roads, and a fast charging station for heavy vehicles at every 100 km on both sides of highways.
Further, in June 2020, the MoP issued an amendment to its revised guidelines and standards for charging infrastructure. Accordingly, the tariff for the supply of electricity to EV public charging stations should not be more than 15 per cent of the average cost of power supply. The amendment has an added clause that a battery charging station (a station where the discharged or partially discharged batteries of EVs can be recharged electrically) will be treated at par with a public charging station (any EV charging station), and the applicable tariff for electricity supply will be the same as that for public charging stations. As per the amendment, a captive charging station (a charging station exclusively for EVs owned or under the control of the owner of the charging station, such as government departments, corporate houses, bus depots, and charging stations owned by the fleet owners) for EVs will be fully owned by the owner and will not be used for commercial purposes.
Tax incentives
The government has been taking a number of initiatives to promote the use of electric/hybrid vehicles in the country. Accordingly, the goods and services tax (GST) on EVs has been reduced from 12 per cent to 5 per cent (effective from August 1, 2019). Further, GST on chargers/EV charging stations has been reduced from 18 per cent to 5 per cent. With a view to incentivising investments in charging infrastructure, the MoP has also allowed the sale of electricity as “service” for charging EVs.
Under Union Budget 2020-21, a series of measures were announced for promoting local manufacturing of EVs and EV components. The basic customs duty on completely built EV units was increased from 25 per cent to 40 per cent. Further, the customs duty on the import of semi-knocked-down forms of e-passenger vehicles has been enhanced from 15 per cent to 30 per cent. Similarly, the customs duty on the import of e-two-wheelers, buses and trucks was increased from 15 per cent to 25 per cent. The customs duty on the import of EVs was increased to 15 per cent. This is expected to curb imports from China, especially poor quality ones, and promote indigenous manufacturing.
Other initiatives
As per a proposal drafted by NITI Aayog, there are plans to offer $4.6 billion in incentives by 2030 to firms manufacturing advanced batteries, starting with cash and infrastructure incentives of Rs 9 billion in the next financial year which would then be ratcheted up annually. The proposal estimates a reduction in oil import bills by as much as $40 billion by 2030 with the adoption of EVs.
While it has planned to retain the import tax rate of 5 per cent for certain types of batteries (including batteries for EVs) until 2022, the tax rate will be increased to 15 per cent thereafter to promote local manufacturing. The policy could benefit battery makers such as South Korea’s LG Chem and Japan’s Panasonic Corporation as well as automakers that have started building EVs domestically such as Tata Motors and Mahindra & Mahindra.
Recently, in August 2020, the government allowed the sale and registration of EVs without prefitted batteries, a move that will reduce the upfront cost of these vehicles. The move comes after the Ministry of Road Transport and Highways received representation from the industry to delink the cost of the battery (which accounts for 30-40 per cent of the total cost) from the vehicle cost.
What lies ahead
A successful transition to EVs will significantly improve India’s energy security, improve its balance of payment position and create a growth-friendly environment for the economy.
For this, governments at both the central and state levels will have a crucial role to play. In August 2020, the Delhi government approved the Delhi EV Policy, 2020, valid for a period of three years, to accelerate the adoption of EVs across vehicle segments. The policy provides purchase incentives of Rs 30,000-Rs 150,000, incentives for scrapping and de-registering old internal combustion engine two-wheelers registered in Delhi, low-interest loans, and road tax and registration fee waivers. Going ahead, other states should also come up with similar EV policies for promoting green mobility. w