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India Steps Back from Bold 2030 Electric Vehicle Adoption Deadline

Although dropping its ambitious commitment to permitting solely the sale of electric vehicles within 12 years, the country is still seeking to pursue its environmentally-friendly transport agenda, albeit at a notably more leisurely pace.

Photo: Undercharged: India’s 1.35 billion population currently only has access to 25 EV power points.
Undercharged: India's 1.35 billion population currently only has access to 25 EV power points.
Photo: Undercharged: India’s 1.35 billion population currently only has access to 25 EV power points.
Undercharged: India's 1.35 billion population currently only has access to 25 EV power points.

The Indian government appears to have reversed out of its commitment that, by 2030, only electric vehicles (EVs) would be sold in the country. This commitment, part of a pledge made by the country's Minister of Power in March 2016, has long been considered over-ambitious by many of India's car manufacturers and infrastructure specialists. When the government's long-mooted official policy on the development of the EV sector failed to materialise, as promised, by the end of February this year, this was seen as tacit acknowledgment that a rethink was on the cards, one that would establish more realistic objectives.

With the official policy announcement cancelled, all of the concerned parties are now awaiting the formal delivery of a series of less-stringent government guidelines, which will act as a route map towards the wider adoption of environmentally-friendly vehicles. A key element of this is expected to be a series of incentives intended to help develop the country's charging infrastructure. This will address one of the prime concerns over meeting the government's 2030 deadline – the fact that the country only has 25 EV charging stations in operation, with planning permission in place for a further 400, almost all of them in or around Delhi or New Delhi.

One particular change expected to form a core part of these new guidelines is the re-designation of charging station operators from electricity providers to vehicle-service providers. This lexicographical sleight-of-hand is seen as the simplest way to dodge the provisions of the country's Electricity Act, which specifies that only specially-licensed distribution companies can sell power. With the reins notably loosened, this would allow existing businesses in the vehicle-service sector – notably garages – to providing charging services. Such businesses would also possibly be entitled to buy electricity at a discounted rate under another proposal expected to be adopted as part of the upcoming guidelines.

Proposals are also expected with regard to tackling the currently prohibitively high cost of EV-compatible batteries. At present, imported batteries, which can power a vehicle with its air-conditioning running for up to 140km, cost about US$4,600 per unit. Given that the average annual salary in India was estimated to be about $3,000 in 2017, this clearly prices EVs out of the reach of all but the country's most affluent residents.

In order to remedy this, the Indian government has wooed a number of international battery producers with a view to establishing domestic manufacturing facilities. Already in the frame for such a move are two Japanese firms – Suzuki and Panasonic –as well as BYD, China's massive Shenzhen-headquartered rechargeable-battery producer. The arrival of such manufacturers, together with a predicted per-annum drop in battery costs of 15-20% for the foreseeable future, is expected to go a long way towards making the country's EV aspirations far more realistically achievable.

In addition to delivering battery-manufacturing facilities, China could well play a more extended role in developing India's EV sector. The mainland is already the world's largest producer of EV vehicles, with a global market share in excess of 60%. With some seven million EVs expected to be in use across China by 2025, the country is already gearing up to create a vast supportive eco-system, which will include battery manufacturing, recycling and charging infrastructure. The sheer size of the mainland market will inevitably create a cost-effective resource that India can cherry-pick in order to drive its own EV development.

Mitra Dave, Mumbai Consultant

Content provided by Picture: HKTDC Research
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