Electrification of India on Wheels: A long due shift from Conventional Vehicles

Abstract

India, having the fourth largest automobile industry, has been struggling to breathe, and has become the fifth most populated country globally. The roads are overburdened with conventional carbon-emitting vehicles and the switch to Electric Vehicles (EVs) has been long due. EVs are dramatically superior to Internal Combustion Engine (ICE) run vehicles attributing to minimum carbon emissions, lower operating cost in the long haul, and minimal maintenance. But they too face some speedbumps for their implementation in India: their cost price, lack of charging infrastructure, variety, and charging time. Indian Government set an aim of promising 30% of vehicles on road by 2030 to be EVs, implementing EVs in public transport and delivery-service platforms, primarily. The government has launched various schemes, subsidies, and grants to make this true but there are a lot of niche areas left unexplored. In addition to this, state governments have also implemented their own policies, the Delhi EV Policy of 2020 being the most recent one. The COVID-19 pandemic, an unexpected red light, made the world come to a screeching halt and has disturbed and possibly delayed these aims, but it also acted as a warning to make things better and make a move towards sustainability. The government must explore alternatives for proper implementation, like using renewable energy for electricity generation, local manufacturing of batteries for EVs, using already established petrol pumps with solar power stations as charging stations, adopting detachable batteries in the four-wheeler EV sector, etc.

Introduction

India, the land of the people, essentially, runs on wheels. Almost 60 lakh km long roads in an over 33 lakh sq. km country, housing over 136 crore people. With the fourth largest automobile industry [1], the country has been breathing air laden with soot and slowly choking on it, and according to research, there’s only a decade worth of time left to stop climate change from being irreversible [2] and the switch to sustainability is looking us right in the eye, hopefully.

This is when the talk of exploring the sector of vehicles run by electricity initiates. The EV industry is already established and well implemented in some western nations like Netherland and Norway, but still is a pleasant stranger to India. Primarily, in India, EVs on the road include an array of vehicles ranging from the primary two-wheelers (motorcycle, scooters, yulu), three-wheelers (rickshaw), four-wheeler (electric cars) to multi-wheeler (buses and trucks). Further, they are classified according to the extent of electrification of the vehicle. There exist Battery Electric Vehicle (BEV), Hybrid Electric Vehicle (HEV), and Plug-in Hybrid Vehicle (PHEV).

Why Electric Vehicles over ICE run vehicles?

India currently holds the position of the fifth most polluted country in the world [3] and ranks second in the number of deaths attributed to holding vehicular transmissions [4] (more than 1.2 million every year) [5]. The country’s streets are overburdened with Internal Combustion Engine (ICE) run vehicles operating on non-renewable energy of fossil fuels, like petrol and diesel and thereby, contributing to the ever-increasing CO2 emissions. There has been observed a perpetual rise in the graphs of vehicle ownership that inevitably leads to a spike in the demand for fossil fuels. The next obvious step for India must therefore be to switch to electric vehicles and use them as a weapon to combat the aggravated global warming and climate change. No tailpipe emissions and some EVs deriving energy from solar, wind, or hydropower sources ensure minimum, to sometimes absolute zero CO2 emissions. In addition to this, the shift will also bring down India’s reliance on oil imports and strengthen the country and the currency. [6]

Apart from the obvious depletion in air pollution, Electric cars possess other attributes that make them dramatically superior to the ICE run cars. Most importantly, their operating cost is significantly lower than ICE cars. The electric cars are made up of more than half less than an ICE vehicle’s components, and that constitutes minimal maintenance charges. The new technology has enabled EVs in a lot of regions to plug in and charge at the convenience of your house, and a couple of hours prove to be enough. [7]  

Even though electric cars pinch the pocket a little more than ICE vehicles, they prove to be more cost-effective in the long haul. It is considerably cheaper to charge a battery than to re-fuel a standard fuel tank. [8] BESCOM in its study shared that it charges the highest tariff for EV charging when compared to other states and fixed charges for slow and fast chargers comes out to be Rs. 60 per kW and Rs. 190 per kW respectively. The base rate charged is Rs. 5 per kWh for any EV with varying consumption pattern. [9] There also is an apparent difference in the performance and drivability of an electric car, adding up to the advantages.

Speedbumps in the process

It is well established that the shift to Electric Vehicles is a long due measure that reasonably, should have already be taken by a populous and toxic air quality hit India. Many would agree to this too. According to a survey in 2019, it was found that 90% of car owners of India were willing to make the switch to EVs, but the only thing that was stopping them were the speedbumps in the process, lack of infrastructure being a prominent one. [10] 

The lack of infrastructure in India for charging outlets breaks the chain of ‘want’ from the consumer. It hinders his/her ease of using the product. An Electric car is useless without power. An electric car is deemed useless if the power station is too far because that will restrict its movement. Taking the example of China, which through EV infrastructure projects made a network of a million charging stations and granted easy access to more than 80% of the consumers. In the year 2018, India had 650 charging stations established all over the country whereas, on the other hand, China had 456000. [11] India, in its attempts towards the infrastructural development released an amendment in 2019 of guidelines for charging infrastructure of EVs. Under this, the government permitted various kinds of Charging Infrastructure including, Public Charging Station (PCS) which can be fast paced chargers or moderate/slow chargers, Private Charging Stations which can be set up by any person for self-use at places like residence or offices and other at public places including malls, restaurants, etc. [12]

Maruti’s Managing director, Kenichi Ayukawa listed inadequate charging infrastructure and high costs to be the prime challenges to selling EVs in India. [13] At present, since batteries of these vehicles cannot be manufactured in India itself, because of lack of availability of raw materials, is why the battery component constitutes about half of the total manufacturing costs, making the electric version heavier on the pocket than its ICE run version. 

Thereafter, the charging time of EVs poses a big hassle for the consumers. Current EV chargers can take on an average of 8 hours [14] and even upon using a fast-paced charger, the time might stretch to more than an hour [15], whereas it takes literal minutes to refuel your ICE run vehicle.

The EV market has an array of choices launched in the west but only a handful in India due to lack of a well-established market, which in turn hinders the possibility of establishing a well-structured EV market. 

The availability of an alternate fuel like CNG holds back the EV market from flourishing. This is because CNG is already popular, well implemented, still cleaner than petrol and diesel, and is already in use by a major portion of the population. [16] The consumer does not want to spend money to shift from an already well working system. It’s not possible to just discard fleets of public transportation that have adopted this alternative and hence, even when the government provides subsidies and grants, the comfort delays the process.

Position of EVs in India

Looking at the state of Indian roads, one thing that is assured is that there are a LOT of vehicles in use. But the question that arises is how many of them are electric vehicles? While electric rickshaws are a common sight, at present, electric vehicles only constitute 1% of total vehicle sales out of which, 95% of sales are those of electric two-wheelers. [17] Empirically, in the time frame of April to December of 2019, the sale of only 1,500 electric cars was recorded [18] which is disappointing, since India got its first electric car, REVA, in 2001. [19] 

Indian government following suit of western countries have set up the future goal of promising 30% of the vehicles on road to be EVs by 2030. For encouraging the same, the government of India has launched the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) schemes under the National Electric Mobility Mission Plan (NEMMP). Phase-II of the FAME Scheme has been sanctioned by the Indian government with an outlay of Rs. 10,000 Crore for 3 years, which was initiated from 1st April 2019.  According to thorough research, if these aims are acquired by the year 2030, they will tentatively result in saving of up to 474 million tons of oil equivalent (Mtoe) and 846 million tons of net CO2 emissions, throughout their lifetime. [20]

The Indian EV market is budding from its infant stage. India’s growth in the past had been stunned by the lack of necessary actions taken by the government, and delay in framing necessary policies. The same has been the case with the EV sector but recently, the Indian government has started to make progress by adopting various measures for evident improvement of the EV sector, while ousting conventional vehicles from their place of comfort. Only last year, the GST rate of EVs was reduced to a mere 5% from 12%, versus the 28% for combustion engine vehicles. In addition to this, an income tax deduction of a sum of Rs. 1.5 lakh is levied on the interest paid on loans, that are taken in the name of purchasing EVs. [21] 

Further, earlier this year, the government proposed notifications imposing an increase of Rs.3 per liter on excise duty and road cess on petrol and diesel, and an increase in road and infrastructure cess by Rs 1 per liter as an additional excise duty. [22] This has resulted in an indirect push towards adopting EVs.

Another far-fetched factor that the government took into consideration was the battery itself, that constituted almost 60% of the cost of EV. To promote the manufacture of these lithium-ion batteries locally, the government has exempted lithium-ion cells in custom duty to eventually, cut down the cost of EVs with the evident slash in the import bill. Custom duty has also been slashed for other EV parts like electric drive assembly, onboard charger, e-compressors, a charging gun, etc. [23] India has also been reaching out to countries with large lithium deposits and has been making perpetual diplomatic efforts to set up FTAs (Free Trade Agreements) with South American and South African countries. There have been developments through which India and Chile already has a trade development in place and India-Bolivia agreed to setting up a Lithium Battery production cell in India through supply of raw lithium from Bolivia, through a joint venture. [24] There is much left to be explored and negotiated on this front, especially, after the aversion from China for raw materials. 

On the charging front, under the Electricity Act, 2003, EV charging has been recognized as a ‘service’ pushing the boundaries of the EV charging market. Further, the Ministry of Power has adopted all threecharging standards: Japan’s CHAdeMO, Europe’s Combined Charging System (CCS), and the homegrown Bharat Standard. According to the Energy Efficiency Services, India will have 79 million EVs on the road, and 8 million slow and fast public charging stations will be installed tentatively by 2030. [25] 

It has been almost 20 years since the launch of the first electric car in India and still, there exist only a handful of choices which you will only be able to avail at a premium budget. But with the change in policies and promises of a change in infrastructure, many leading vehicle manufacturers are launching their EVs in India. From only Mahindra, Tata, Hyundai and MG to Audi, BMW, Volkswagen and more, [26] the options are increasing at a steady pace and 2021 is expected to see an influx of such launches.

Delhi EV Policy 2020 

Apart from the center, a lot of states also have taken it upon themselves to promote EVs through new proposed and implemented policies.  The most recent one has been Delhi’s Electric Vehicle Policy 2020. This policy aims at transforming Delhi into the Electric Vehicle capital of the country. It also aims to combat Delhi’s persistent toxic air quality through efficient implementation of EVs and targeting a 25% account of EV among all new vehicles registered by 2024. [27] This is going to prove to be quite a task, considering the current data of EVs which constitute 0.29% of the total number of vehicles run in the city. [28]

The preliminary plan of action involved in this policy is the replacement of the existing public transport vehicles including, auto-rickshaws and state-run buses with their electric counterparts. This initiative by the government was essential and should be appreciated, as probing of EVs in public mobility is a win for the lungs of citizens. This policy will also work on promoting the adoption of electric mobile alternatives for all delivery-based services.

For enthusiastic promotion, the government will offer loans for EVs with a low-interest rate and also offer various subsidies and waive the road tax and registration fee for all electric vehicles bought in Delhi. These subsidies and grants will be in addition to the ones available under Phase-II of FAME India. [29] These incentives will act as bait for a new customer.

Another unique provision under this policy is the ‘scrapping incentive’. It is available to people who wish to make a switch from their ICE run vehicle to a new EV. This provision allows those people to exchange the old combustion vehicle for a drop in the cost of a new EV. This provision makes the perfect opportunity for hesitant customers to make an efficient and affordable switch.

There are mentions in provisions for the establishment of numerous charging points and public hubs like workplaces. The policy also requires the parking areas to be made ready for the influx of EVs. If not all then, at least, 20% of the total area. The aim is to establish charging setups within 3 km from anywhere in the capital. [30]

For the smooth carrying out of the provisions of this policy, a state EV Board will be set up. In addition to this, a State EV fund and a state EV Cell will be constituted. The state EV board will be responsible for the effective and proper implementation of the EV policy. [31] 

The policy deserves its share of appreciation, but the fact that it has been silent on so many aspects cannot be overlooked. The policy nowhere talks about how the competition among different sectors, like petrol and CNG will be   disqualified, or how the state plans to meet such an enormous energy demand, or where does the policy stand at the realms of recycling battery instead of manufacturing new one which will incur hefty economic burden on the government.

The policy has been notified for only three years, after which it has the option of being renewed in the present form or undergo suitable amendments. This provision just might be our answer to all the problem areas left untouched in the future.

Effects of COVID-19 on the country’s slow-paced transition 

COVID-19, an unexpected red light that made the world hit the emergency brakes and come to a screeching halt. With people locked in their houses and the decline of the economy, the mobile world came to an uncomfortable stop. The world’s fourth-largest market abandoned its unfinished manufacturing work with no promises of resuming and the market fell. Empirically, at the beginning of the lockdown, this industry witnessed a major estimated loss of almost Rs. 2,300 crore every day. [32] 

This worldwide pandemic led to a steep drop in the consumer demand. Further, the prioritized spending by the government in other sectors lead to depreciate the ability to provide for financial assistance for EV adoption, and the building of a charging infrastructure to diminish. 

With the recession in the economy of India which will probably only climb up after 2022 or 2023, a delay in the implementation and electrification of vehicles is honestly, inevitable. 

If anything, the excess time, the depleting pollution in a world at pause, the ticking of the climate change clock, all became coherent to people and they came out of this disaster more aware and more conscious to take steps in the favor of sustainability. 

Maybe this was the last alarm with no snooze button, the last warning, that things can still get better. But only if we try.

Dehazing the path ahead 

The EV sector has been kept at the boundary for long enough because of the lack of necessary policies, poor implementation of existing policies, and delay in decision making and rule formulating. We need to delve into this sector headfirst and put our focus and capital to work upon the ease of implementation of this sector. Even though, recently, there have been steps taken and policies being made, which ensures that we are in the right direction, but there is an immediate need to speed up this process, and to make constant, continuous, and sincere efforts towards the implementation of the recently enacted provisions. 

There is a need for the government to find alternatives to get over the speed breakers, mentioned above. For tackling the problem of lack of charging infrastructure in the country, the government can use already established petrol pumps and set up charging stations, thereby laying energy grids. Energy can also be generated from installing rooftop solar panels in the existing petrol pumps or by small scale production methods like from the speedy transfer of fuel to the underground storage at the petrol filling pumps. 

To overcome the hindrance created by the high price of EVs, the government has already, in the Phase-II of FAME Scheme, slashed the custom for the lithium-ion cells from which, the battery of an EV can be manufactured locally, reducing the cost price of the desired electric vehicles. 

Charging time is another problem that has sprouted, and the installation of fast-paced chargers at home under Private Charging Stations can prove very beneficial in this situation. 

The subsidies on GST have been slashed on EVs but not on its batteries or for the service of charging. [33] This partially beneficial policy can be made to benefit the consumer more holistically. 

Also, the new amendment in the Central Motor Vehicle Rules provides provision which lifts the compulsion of carrying a spare tyre upon the compliance of some conditions namely, the car being equipped with a monitoring system for tyre pressure or a tyre repair kit. [34] This amendment has been put into action for the accommodation of larger batteries for EVs. This has been done to ease the shift to EVs by increasing their battery life. 

Electric two-wheelers enjoy an exclusive advantage which is of detachable changeable battery. If the same concept can be implemented in the four-wheeler sector, then a spare charged battery being carried in the car can do wonders for this sector. Unfortunately, the new amended Charging Infrastructure Guidelines kept silent on this. 

Along with these measures, the disposal of used batteries should also be done in strict accordance with the rules by the Ministry of Environment, Forest and Climate Change, to prevent any harm done to the environment.

One lingering concern is the fact that even today in India, electricity is generated from coal-based powerplants, which undo some of the environmental benefits. A solution to this is to meet the target of 175 GW of renewable energy by 2022. [35] This clean energy can then be used to generate electricity without harming the environment. 

Once all these problems get in the motion of being solved, the EV sector of India will become an attractive market and that will increase the availability of variety in EVs. Already, there are plans of a handful of companies launching their new EVs in India by next year. 

The shift is inevitable. India has begun its ascent towards becoming a country driven by clean energy and there is no turning back.

About the Author

Swadha Sharma is a 2nd year Law student at the University School of Law and Legal Studies, Guru Gobind Singh Indraprastha University. She is also a Junior Editor at the Indian Journal of Projects, Infrastructure, and Energy Law (IJPIEL).  

Editorial Team

 

Preferred Method of Citation

Swadha Sharma, “Electrification of India on Wheels: A long due shift from Conventional Vehicles” (IJPIEL, 31 December 2020)

<https://ijpiel.com/index.php/2020/12/28/electrification-of-india-on-wheels-a-long-due-shift-from-conventional-vehicles/?et_fb=1&PageSpeed=off>

Endnotes

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[2] Only 11 Years left to prevent irreversible damage from climate change, speakers warn during General Assembly High-Level Meeting, United Nations, (Mar. 28, 2019), https://www.un.org/press/en/2019/ga12131.doc.htm.

[3] Jacob Koshy, India 5^th Most Polluted Country in the world: Report, The Hindu, (Feb. 26, 2020, 01:12 AM), https://www.thehindu.com/news/national/21-indian-cities-among-worlds-30-most-polluted-delhi-worlds-most-polluted-capital-city-report/article30913690.ece.

[4] Health Impacts of Air Pollution from Transportation Sources in India, The International Council on Clean Transportation, (June 2019), https://theicct.org/sites/default/files/ICCT_factsheet_health_impact_airpollution_Delhi_20190705.pdf. 

[5] Air Pollution causes 12L deaths in India annually; Delhi worst off: Greenpeace, Hindustan Times, (Jan. 12, 2017, 01:34 AM), https://www.hindustantimes.com/india-news/air-pollution-causes-12l-deaths-in-india-annually-delhi-worst-off-greenpeace/story-zWsWWKzs8V3EO9RrCmkfgM.html. 

[6] India to sell only electric vehicles by 2030: Piyush Goyal, The Hindu, (Aug. 18, 2017, 13:44 PM), https://www.thehindu.com/news/national/karnataka/india-to-sell-only-electric-vehicles-by-2030-piyush-goyal/article19516175.ece.

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 [15] Id.

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[18] Id.

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[23] Supra note 21

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[28] Akshay Malhotra and Esha Nair, India: Delhi Electric vehicles Policy 2020, Mondaq, (Sep, 21, 2020), https://www.mondaq.com/india/rail-road-cycling/986574/delhi-electric-vehicles-policy-2020.

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[30] Id.

[31] Shalini Priya and Deepanshu Taumar, Decoding Delhi EV Policy 2020, Economic Times, (Aug. 08, 2020, 01:26 PM) https://auto.economictimes.indiatimes.com/news/policy/delhi-electric-vehicle-policy-2020-key-things-to-know-and-analysis/77420070

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 [33] Nishant Sharma, Industry confused as India takes the battery out of EVs to boost demand, Bloomberg Quint, (Sept. 15, 2020, 08:27 PM), https://www.bloombergquint.com/business/industry-confused-as-india-takes-the-battery-out-of-evs-to-boost-demand.

 [34] Anirudh SK, To Boost Electric Vehicle Sales, Centre Amends Motor Vehicle Act; Spare Tyre Not Necessary in All Cars, News 18, (Jul.21, 2020, 10:25 PM)  https://www.news18.com/news/auto/to-boost-electric-vehicle-sales-centre-amends-motor-vehicle-act-spare-tyre-not-necessary-in-all-cars-2727333.html

 [35] Report of the Expert Group on 175 GW RE by 2022, Niti Aayog, https://niti.gov.in/writereaddata/files/175-GW-Renewable-Energy.pdf