The auto industry has been at the receiving end of policy U-turns in recent times. Last week, the Union Minister for Road Transport and Highways, Nitin Gadkari, stirred up a hornet’s nest by declaring that the government would not formulate a separate policy for electric vehicles (EVs).
This comes after the government declared some time last year that it is gunning for an all-electric fleet in the country by 2030 and followed it up by disincentivising even hybrid vehicles by slapping higher taxes on them under the GST regime. Auto makers who have started making big investments in EV technology are now left playing the guessing game — will the government bite the bullet or not?
Favourable moves
The odd-even experiment in Delhi, the ban on diesel cars/SUVs with engine capacity over 2000cc in Delhi and NCR by the National Green Tribunal, the Supreme Court’s decision to not extend the time line for adoption of BS IV standard fuel across the country and the government’s decision to jump directly to BS VI norms by 2020, all show that India is now serious about curbing vehicle pollution.
The most ambitious of all the measures taken so far is the plan to have an all-electric vehicle fleet by 2030. As a precursor to this, the government rolled out a National Electric Mobility Mission Plan in 2013, under which it has been extending sops for the manufacture of greener vehicles through the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) scheme in the last two-three years.
In tune with the government’s EV ambition, a paper titled India Leaps Ahead: Transformative Mobility Solutions For All was put out by the Niti Aayog in May 2017. It called for 100 per cent electrification of three-wheelers, four-wheeler (commercial) and public transport vehicles, while aiming for 40 per cent electrification in two-wheelers and four-wheelers used for personal transport, by 2030.
Considering the ambition of having an all-electric fleet by 2030 and that EVs are more environment-friendly, the government is indirectly discouraging hybrids. It pulled mild hybrid vehicles out of FAME after April 1, 2017. It also began taxing hybrid vehicles on the same lines as normal vehicles under the GST regime.
Many auto makers have made grand plans to meet the 2030 deadline. Mahindra and Mahindra and Tata Motors have stepped up the pace, beginning supply of EVs to Energy Efficiency Services Ltd, for use by the government. With Toyota and Suzuki joining hands, Maruti Suzuki has declared that it will come out with its EV in 2020. E-mobility took centre stage in the recently concluded auto expo in Delhi too, with other manufacturers such as Hyundai and Renault showcasing concept EVs.
National auto policy
A draft National Auto Policy, which (along with other ideas) discusses measures to enhance adoption of green vehicles, was put out for public comments by the Ministry of Road Transport last Friday. It points out the lack of clarity in the government’s strategy for green mobility and calls for a specific roadmap for India, defining the incentives and infrastructure requirements.
The draft policy also says that consumer awareness on the benefits of green vehicles, along with incentives for purchase in the initial years, will be essential to boost adoption. According to the draft policy, the government should take the lead in using environment-friendly vehicles. Twenty-five per cent of all vehicles from 2023 and 75 per cent of all vehicles from 2030 procured by the Centre and State governments, and 50 per cent of all vehicles from 2023 and 100 per cent of all vehicles from 2030 procured by municipal corporations in metros, must be green. While all this sounds good, questions arise as to whether ‘green vehicle’ means ‘electric vehicle’ or whether it would also include alternative fuel vehicles, hybrid vehicles and the like.
Overall, the Minister’s statement and the draft Auto Policy have created a lot of uncertainty about the future of electric mobility in India. Expectations about the announcement of an EV policy and duty concessions for EV parts in the Budget ran high. But the government kept mum. Although related Ministries, such as Power, State governments and auto manufacturers can do their bit to further the cause of EVs, considering the sheer scale of the 2030 dream, a country-wide EV policy is the need of the hour.
A uniform policy to bring down import cost of batteries, support domestic manufacturing, provide incentives for customers to buy EVs, and to set up charging infrastructure across the country, can go a long way in realising the 2030 goal. That is, if the government does not backtrack on its policy goals.