The Climate and Sustainability Initiative (CSI) has launched its India operations. Alongside this announcement, CSI has unveiled a report titled 'India’s Auto Industry: Mapping the Course to Net Zero by 2070.' This report lays out a detailed roadmap for the decarbonisation of India’s auto sector, aligning with the nation’s commitment to achieving net-zero emissions by 2070. The transition, critical for combating climate change, is also expected to generate significant economic opportunities, driving growth in the mobility industry and fostering a robust market for electric vehicles (EVs).
The report presents a detailed scenario for the automobile sector’s decarbonisation, emphasising the necessary investments, potential gains, and financial mechanisms required to support this transformation. Covering various vehicular categories, including two-wheelers, three-wheelers, cars, buses, and trucks, some key findings include the need for Original Equipment Manufacturers (OEMs) to invest approximately USD 323 billion to produce EVs alongside existing technologies. This investment is projected to generate a staggering USD 14.1 trillion in revenue for OEMs by 2070.
Additionally, the report forecasts that the transition could lead to an overall market creation exceeding USD 19.7 trillion by 2070, with cars accounting for 63% of this market and contributing nearly USD 15.5 trillion. The transition of the automobile sector could potentially yield USD 4.1 trillion in Goods and Services Tax (GST) revenue from 2020 to 2070. However, to achieve this transition, India will require vehicle loans worth USD 9.6 trillion by 2070, increasing the volume of auto loans more than twentyfold. The annual battery demand for EVs could rise to around 1,716 GWh by 2070, necessitating an investment of USD 196 billion for complete domestic production until that year.
The report highlights the significant financial barriers that need to be addressed to facilitate the transition, highlighting the need for innovative financing solutions, such as first-loss guarantees for financial institutions and lines of credit for EVs, to support consumers across all sections of society. It also emphasises the critical role of government support in this transition. To support the switch to EVs, regulators and policymakers will need to boost the financing available to the sector, necessitating a faster growth of the auto loan portfolio compared to the overall banking sector.
Schemes such as the Faster Adoption and Manufacturing of Electric and Hybrid Vehicles Phase II (FAME II) and its successor, the Electric Mobility Promotion Scheme (EMPS), along with various state-specific incentives, have already spurred the growth of EV sales in India. However, continued policy support, including favourable tax regimes and incentives for domestic battery production, will be essential to sustain this momentum.