Gujarat has become the latest Indian state to roll out a policy to promote electric vehicles. Announced on June 22, 2021, the “Gujarat State Electric Vehicles Policy 2021” will aim to transition the state’s transportation sector towards electric mobility, and make Gujarat a manufacturing hub for EVs and ancillary equipment.
In addition, the policy objectives mention that the State would encourage start-ups and investment in the field of electric mobility and associated support sectors such as data analytics and information technology. All of these would eventually lead to the improvement of the State’s environment quality by reducing air pollution.
India’s electric mobility journey started in all earnest in January 2013, when the then Manmohan Singh-led UPA government launched the National Electric Mobility Mission Plan with a roadmap until 2020. Subsequently, the FAME I and Fame II schemes were introduced by the incumbent government in 2015 and 2019 respectively.
Recently, the Ministry of Heavy Industries and Public Enterprises notified that the demand incentive for electric two-wheelers has been raised to INR 15,000/Kwh from the earlier INR 10,000/Kwh. Leading e2W manufacturers in the country have welcomed the move, as this would bring the prices of their products closer to ICE vehicles.
This has been one of the biggest blockades of the high sticker price of these EVs, Sohinder Gill, Director General, Society of Manufacturers of Electric Vehicles (SMEV) had said. It must be noted that the subsidy will have a cap of 40% of the cost of the vehicle.
States getting into the act
With its recent announcement, Gujarat has now become the 15th Indian state to announce a dedicated EV policy. The policy will be applicable to all classes of EVs that have taken subsidy under the FAME II scheme and any amendments thereafter. Moreover, the incentives for setting up a charging station shall be applicable to charging stations meeting the guidelines and standards of the Ministry of Power Circular, dated October 1, 2019 and any amendments thereafter, said the Gujarat government gazette.
Karnataka was the first Indian state to announce an EV policy in 2017, and together with Tamil Nadu, the state has clearly been able to make big moves in terms of attracting investments from EV manufacturers and other ecosystem partners.
Earlier this year, Tesla set-up its India office in Bangalore; and while Karnataka Chief Minister BS Yediyurappa claimed that Tesla will also put up its facility in the state, there has been no statement issued by the company yet.
Other than Karnataka, states with notified EV policies include Delhi, Kerala, Maharashtra, Uttarakhand, Tamil Nadu, Andhra Pradesh, Madhya Pradesh, Uttar Pradesh and Telangana. Other states including Bihar, Chandigarh, Punjab, Haryana, Gujarat, Assam and Himachal Pradesh have draft EV policies awaiting state cabinet approvals.
The second phase of the FAME scheme clearly has provided the necessary impetus to the country’s EV programme, with as many as nine out of the 15 states announcing their intent in pushing e-mobility in their respective states.
Tamil Nadu, which is one of the country’s most favoured automotive destinations, has already attracted a few major EV investments in recent years.
Hero MotoCorp-backed electric two-wheeler maker Ather Energy, for instance, has lined up investment to the tune of INR 635 crore over the next five years at its manufacturing facility in Hosur to scale up production. Ola Electric, on the other hand, will invest INR 2,400 crore to build the world’s largest e-scooter facility in Hosur.
Different states, different strategies
While the final vision is similar, every state seems to be taking a different path to achieve their e-mobility goals.
Delhi’s EV policy has a three-year validity period, while Gujarat’s EV policy will be valid for a period of four years, starting July 1, 2021. While most of the other states have created policies with a five-year validity period, Telangana and Tamil Nadu have long-term, 10-year strategies.
Even the nodal agencies leading the EV strategy for states vary from one state to another. The Gujarat strategy will be led by the Ports and Transport Department as the nodal department, which will be responsible for planning, implementation and review of the policy, while the Energy and Petrochemicals Department will lead work on charging stations and subsidies related to it.
In Delhi, Kerala and Punjab, the transport department is responsible for the execution of the EV policies, while the urban development and housing department is the nodal agency in Madhya Pradesh.
State-wise, commitments to e-mobility related investments for products and infrastructure and creation of new jobs vary, but the collective vision and goal for all states remain the same – although many of these goals seem too lofty.
Madhya Pradesh, like Delhi, has set a target for 25% of all its new vehicle registrations to be electric. Kerala has envisioned having one million EVs on its roads during the pan period.
In terms of investments, Tamil Nadu has committed INR 500 billion, while Uttar Pradesh has allocated INR 400 billion in investments for its EV programme. Likewise, Karnataka (INR 310 billion), Andhra Pradesh (INR 300 billion), Telangana (INR 290 billion) and Maharashtra (INR 250 billion) are some of the other major states with strong commitments towards e-mobility.
Policies proposed by most states promises to promote the adoption of EV technology by way of providing both fiscal and non-fiscal incentives. Apart from product incentives, these policies of course have strong intent in building dedicated infrastructure for charging of EVs.
How are states performing?
Readers would recall that the government had approved phase-II of the FAME scheme for a period of three years starting April 1, 2019. Of the total outlay of INR 10,000 crore, the government claims about 86% has been allocated for demand incentive so as to create demand for xEVs in the country.
This phase aims to generate demand by way of supporting 7000 e-buses, 500,000 e-three-wheelers, 55,000 e-four-wheeler passenger cars (including strong hybrid) and 10 lakh e-two-wheelers.
By the time of releasing this feature, a portal run by the National Automotive Board, Department of Heavy Industry stated that the total number of vehicles supported under the FAME II scheme nationally stands at 78,050 units, leading to savings of over 21 million litre of fuel in the planned period, and CO2 reduction of 123,386 kg per day.
In terms of vehicles supported, Karnataka leads with 17,438 units, followed by Tamil Nadu with 11,907 units of electric vehicles. Maharashtra, Uttar Pradesh and Delhi follow with 8,815 units, 5,670 units and 5,632 units respectively.
Segregating the supported vehicles reported by the government further, e2Ws accounted for the bulk of volumes with 59,985 units, thus cornering 77% of the overall vehicles supported under FAME II. Electric 3Ws accounted for 16,503 units or 21%, while – as per the statistics available – a small 2%, or 1,562 electric four-wheelers units were supported under the scheme.
A recent corrigendum published in the Gazette of India, the Ministry of Heavy Industries and Public Enterprises modified the second phase of the FAME scheme to allot the e3Ws and e-buses component of FAME scheme to state-run Energy Efficiency Services Ltd (EESL).
As per the announcement, EESL will aggregate demand for 300,000 lakh e3Ws for multiple user segments, while for e-buses four-million plus cities (Mumbai, Delhi, Bangalore, Hyderabad, Ahmedabad, Chennai, Kolkata, Surat, and Pune) will be targeted. EESL will go for aggregation of demand in these nine cities for the remaining e-buses under the scheme on an OPEX basis, the Gazette notification stated.
It must be noted that, of the 7,090 e-buses to be subsidised under the scheme, 6,265 were sanctioned to the states. Of these, state transport undertakings (STUs) have issued supply orders for 3,118 buses till May 31, 2021.
Outlook
Earlier in April this year, Mobility Outlook reported how over 98% of the FAME-II scheme subsidy is lying idle. Funds allocated to speed-up electrification of public transportation, personal mobility and charging infrastructure remain grossly underutilised, more than two years since the scheme was announced.
A national business daily had also reported that only 5%, or INR 492 crore, of the INR 10,000 crore allocated under its second phase was spent till March 2021.
Considering FAME-II was announced for a period of three years, and will end on March 31, 2022, this might be a critical opportunity lost. One can hope things take a positive turn over the course of the next 10 months, and that will require the government to ease out the stringent performance criteria set by the government to qualify for subsidies, as well as the increased focus on localisation in a short period of time.
The recently raising of demand incentive for e2Ws is a certain ray of hope, and one expects this to provide the necessary boost to the fledgling e-mobility sector in India.