Report: India’s Strategy to Avoid Harm in the Global EV Market Shake-Up
Kartavya Desk Staff
Syllabus: Environment Conservation / Energy
Source: TH
Context: A Global Trade Research Initiative (GTRI) report, “India’s Strategy to Avoid Harm in the Global EV Market Shake-Up,” urges India to let market forces guide its EV sector’s growth and develop its own strategy.
Background:
In 2023, China dominated the global EV market, exporting 1.6 million EVs. Western countries have begun imposing tariffs on Chinese EV imports, prompting China to move production to ASEAN nations and India. Indian EV production remains reliant on Chinese components, including batteries.
India’s reliance on coal for electricity generation significantly reduces the environmental benefits of electric vehicles (EVs), undermining their potential to contribute to cleaner transportation. Additionally, over 80% of the cost of EVs in India is tied to components imported from China, particularly batteries, which increases the country’s dependency on Chinese supply chains. To address these challenges, it is recommended that India invest in research and development for advanced battery technologies, such as solid-state batteries and hydrogen fuel cells, while also establishing robust recycling infrastructure. Moreover, supporting clean energy sources for EV charging and conducting comprehensive assessments of EVs’ environmental impacts will be crucial for ensuring long-term sustainability.
What are Electric Vehicles?
Electric vehicles (EVs) use electric motors for propulsion instead of traditional internal combustion engines. Interest in EVs has surged due to concerns over carbon emissions from fuel-based vehicles. There are three main types of EVs:
• Battery Electric Vehicles (BEVs): Fully powered by batteries with zero emissions.
• Plug-in Hybrid Electric Vehicles (PHEVs): Use both an electric motor and gasoline engine; can be charged externally.
• Hybrid Electric Vehicles (HEVs): Combine electric and gasoline power, but cannot be externally charged; the battery is charged via the engine or regenerative braking.
Previously, Union Government has approved an E-Vehicle policy aimed at positioning India as a manufacturing hub for electric vehicles (EVs) with cutting-edge technology.
Aspect | Details
Policy Objective | Promote India as a manufacturing destination for electric vehicles (EVs) with advanced technology
Implementation | The Project Management Agency (PMA) will be responsible for providing secretarial, managerial and implementation support and carrying out other responsibilities as assigned by the Government of India (GoI)
Ministry | Ministry of Heavy Industries
Eligibility Criteria | Minimum Investment Requirement: Rs 4150 Cr (approximately USD 500 Mn)
Maximum Investment: No cap on maximum investment
Manufacturing Timeline: Set up manufacturing facilities within 3 years
Domestic Value Addition (DVA) criteria during manufacturing: 25% within a period of 3 years, and 50% within 5 years from the date of issuance of approval letter by the Ministry of Heavy Industries/ PMA
The Bank guarantee will be returned only when 50% DVA is attained an investment of at least Rs 4,150 crore has been made, or to the extent of duty foregone in 5 years, whichever is higher.
Performance Criteria: All electric passenger vehicles shall meet the performance criteria of the Production Linked Incentive (PLI) Auto scheme.
Tenure of the Policy | 5 years or as notified by GoI.
Key Benefits | Encourages technological advancements in EV manufacturing; Fosters Make in India initiative; Promotes healthy competition among EV players; Reduces crude oil imports and trade deficit; Mitigates air pollution, particularly in urban areas; Positive impact on health and environment
Other Initiatives to Promote EV | Faster Adoption and Manufacturing of EVs (FAME) India scheme: Phase I was launched in 2015 and Phase II was launched in 2019.
EV 30@30 initiative for the deployment of EVs and target at least 30 per cent of new EV sales by 2030
PLI Scheme for Automobile and Automotive Components (PLI-Auto) in 2021, as financial incentives to promote domestic manufacturing and draw investments into the value chain of the automotive manufacturing industry.
Measures to Accelerate EV Adoption in India:
• Battery Lease-to-Own Program: Reduce initial costs by leasing batteries.
• Invest in Battery Technology: Develop advanced, high-density batteries.
• Increase Charger Density: Expand and convert parking meters to charging points.
• Standardization: Develop standard protocols for interoperability.
• EV Rural Entrepreneurs Program: Support rural charging station setups.
• Highway Battery Swap Corridors: Create swap stations along major routes.
• Equal Subsidies for EVs and Hybrids: Provide equal support for both technologies.
• Second-Life Battery Bazaar: Repurpose used batteries for various applications.
Lessons from Other Countries:
• Europe: Financial incentives boost adoption.
• China: Government support and competition drive market growth.
• US: Innovation and strategic funding are key.
Mains Link:
How is efficient and affordable urban mass transport key to the rapid economic development in India? (UPSC 2019)