The Indian automotive industry is going through a monumental shift, something similar to the dawn of the millennium when we saw many foreign players enter India giving touch competition to established brands like Maruti. In current times, things haven’t changed much as far as entry of foreign carmakers is concerned, who are bringing new technology and products, pushing the India carmakers to do the best. In the end, the consumer is winning with some of the best cars we have ever seen on the Indian roads.
What has changed this time, though, is the overall behaviour of the Indian auto industry, which witnessed its worst ever period in 2019, only to realize Coronavirus will further dent and hopes of comeback. These, times, however are temporary. With so many options at disposable, there’s a positive outlook towards the market.
While while the conventional auto industry is looking at the greener pastures thanks to the positive buyer’s sentiment, the alternate fuel industry, more prominently the electric vehicle industry is struggling to find a foothold in a traditional market like India. While there’s not much craze among buyers towards cars, two-wheelers and commercial vehicles at large, have seen tremendous growth thanks to the push from the government.
For a technology-forward product, cost is something which can be a hindrance in initial years as technology comes at a price and electric vehicles thrive on advanced technology. Only government’s intervention can lead to push of electric vehicles in a cost conscious country like India.
Thankfully so, the government of India has launched many policies to boost Electric mobility in India. Interestingly, the government of the day has realized that the true potential of electric vehicles can be achieved by pushing commercial vehicles and two wheelers more than four wheelers. We pen down a few of these policies that is helping push electric vehicle sales in India-
PLI Scheme
Government of India recently approved the production-linked incentive (PLI) scheme for the automobile sector. The scheme is focused on pushing alternate fuel usage in India, and for pushing technological advancement in the country. Govt has approved Rs 26,058 crore for the PLI scheme which will be applicable from FY23 for five years and the base year for eligibility criteria would be 2019-20.
As per govt, the PLI Scheme has two components viz Champion OEM Incentive Scheme and Component Champion Incentive Scheme. The Champion OEM Incentive scheme is a ‘sales value linked’ scheme, applicable on Battery Electric Vehicles and Hydrogen Fuel Cell Vehicles of all segments. The Component Champion Incentive scheme is a ‘sales value linked’ scheme, applicable on Advanced Automotive Technology components of vehicles, Completely Knocked Down (CKD)/ Semi Knocked Down (SKD) kits, Vehicle aggregates of 2-Wheelers, 3-Wheelers, passenger vehicles, commercial vehicles and tractors etc.
FAME II Policy
Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME-India) Scheme was launched in 2011 and got a new lease of life after Government approved Phase-II of FAME Scheme with an outlay of Rs 10,000 Crore for a period of 3 years commencing from 1st April 2019. This phase is targeted at pushing commercial vehicle sales in India with greater emphasis on providing affordable & environment friendly public transportation options for the masses, including e-3W, e-4W and e-bus segments.
Govt has set a target to push e mobility by supporting 7000 e-Buses, 5 lakh e-3 Wheelers, 55000 e-4 Wheeler Passenger Cars (including Strong Hybrid) and 10 lakh e-2 Wheelers. Only advanced battery and registered vehicles are incentivized under the scheme and in combination with various state sponsored subsidies, customers get a good deal while buying an electric vehicle.
Scrappage Policy
PM Narendra Modi recently launched the much awaited vehicle scrappage policy in India at the Gujarat Investor Summit. Vehicle scrapping will help phase out unfit and polluting vehicles in an environment friendly manner, he said. PM Modi also mentioned that the govt aims to create a viable circular economy and bring value for all stakeholders while being environmentally responsible.
The government expects to generate employment for about 35,000 people at vehicle fitness centres and scrapyards and a collective investment of Rs 10,000 crore. The vehicle fitness test cost will depend on the type of vehicle. For a personal vehicle, it will cost Rs 300-400, while for a commercial vehicle it could be Rs 1,000-1,500. While the policy isn’t directly aimed at electric vehicles, by pushing out old vehicles off the road, and by providing subsidies on electric vehicles, govt indirectly is boosting EV sales in the country.
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