Navigating Policy Landscapes: How Regulations Are Shaping EV Adoption in India

May 23, 2024. By News Bureau

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EV Adoption in India

Zypp Electric

Electric Vehicles

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The future of mobility is undergoing a rapid transformation, with India at the forefront of this electric vehicle (EV) revolution. Gradually, EVs are becoming a popular mode of transportation, especially in the urban belt of the country. As of March 2023, India boasted an impressive 2.3 million electric vehicles, predominantly two and three-wheelers, each surpassing 1.1 million units. To support this electric mobility, the Indian government has been taking initiatives for nearly a decade.

Policy initiatives catalyzing EV adoption
One of the standout policies, the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, initiated in 2015 and followed by FAME II in 2019, has played a crucial role in incentivizing EV buyers. While supporting the establishment of electric vehicle charging stations, it is also contributing to upfront reductions in the purchase price of electric vehicles. It is adding momentum to India’s ambitious targets of significant EV penetration. At the same time, several states in the country have introduced their policies to create an enabling environment for electric vehicle purchases and local manufacturing. Tamil Nadu, Telangana, Gujarat, Maharashtra, Haryana, Rajasthan, Chhattisgarh, and Odisha are among the states paving the way for EV adoption through supportive regulations.

Boost in domestic manufacturing
India’s Production Linked Incentive (PLI) Scheme for the automotive sector, launched in September 2021 with an outlay of USD 3.1 billion, is a game-changer for the EV sector. Aimed at fostering domestic manufacturing of advanced automotive technology (AAT) products and attracting investments in the automotive value chain, the scheme has already garnered a proposed investment of USD 9 billion against the target estimate of US$5.1 billion over five years. This, indeed is acting as a significant push to manufacture electric vehicles in the country.

While mass EV adoption does not solely depend on government subsidies, existing incentives are focused on driving awareness and promoting local manufacturing. Positive regulatory interventions like FAME and PLI are benefitting the original equipment manufacturers (OEMs) and elevate India's efforts to become a global EV manufacturing hub.

Furthermore, the government's Phased Manufacturing Programme (PMP) supports the local industry through custom duty revisions and mandates for local component sourcing to ensure OEMs' eligibility for demand-side subsidies. These developments have paved the way for the widespread adoption of EVs in India. According to NITI Aayog and RMI, EV sales penetration is projected to reach a substantial 80% for two and three-wheelers, and 50% for four-wheelers by 2030, underscoring the massive opportunity for emerging startups and traditional OEMs.

Road Ahead: New EV policy paving the future of electric mobility
India's new EV policy further reinforces the 'Make in India' initiative, aiming to attract global investors by fostering domestic production of cutting-edge EV technologies. The policy is a well-thought-out step by the Indian government to encourage unlimited investment in the EV landscape. It also mandates a three-year timeline for setting up manufacturing facilities. Emphasizing domestic value addition, the new EV policy sets a 50% target within five years, offering incentives for investments exceeding USD 800 million and allowing limited EV imports under certain conditions. By leveraging the domestic potential, India is moving towards a greener resilient future while making its mark in the electric mobility revolution worldwide.

- Akash Gupta, Co-Founder and CEO, Zypp Electric