India needs a better EV future

India needs a better EV future

I don't travel often to India and I haven't been there for a while, so I was surprised to hear last week that the country may halt the use of private vehicles in New Delhi if air pollution in the capital gets any worse.

How bad has it become? The government is even developing firecrackers that emit less pollution, Environment Minister Harsh Vardhan said in Delhi last Monday.

India is now home to nine of the 10 most polluted cities on our planet, according to the World Health Organization (WHO). Delhi has dropped from first to sixth on the table but pollution has reached severe levels in recent days and is likely to worsen. The air quality index, which measures the concentration of poisonous particulate matter, hit 469 in parts of Delhi on Tuesday, up from 299.4 the week before.

Toxic air has become a global menace that kills 7 million people each year, the United Nations Environment Programme said in a recent report. In Asia, air pollution is a health risk for 4 billion people, killing about 4 million of them annually.

The transport sector accounts for about 90% of greenhouse gas emissions and consumes about 15% of total energy, mostly sourced from coal, diesel and petroleum. This sector also has considerable potential for reducing energy use and mitigating its impact on climate change.

To tackle alarming pollution and reduce rising oil imports, the Indian government is scaling up efforts to encourage consumers to opt for electric vehicles (EV). It wants 30% of the two-wheelers and four-wheelers on its roads to be electric by 2030. Both the Union and state governments are considering numerous options to speed the transition toward electric-based transport systems.

One recent central government initiative is the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (Fame) scheme. Under the first phase from March to the end of September, financial support was offered for purchasers of EVs, hybrid vehicles and electric buses.

The new Fame-II programme that began on Oct 1 has a much broader focus, with 55 billion rupees (US$750 million) budgeted over five years for subsidies for all sorts of EVs. The government is also considering removing import restrictions on price and engine capacities as well as mandatory local testing conditions to draw more global players.

As well, GST rates have been slashed for electric batteries, while fringe benefits such as green number plates, and deductions in toll and parking charges, are also under consideration and expected to be announced soon.

But efforts to promote electric mobility have yet to show fruitful results. The uptake of EVs, especially among private car owners, remains abysmally low, despite the generous subsidies offered under Fame-I. Buying EVs is still driven only by personal choice and concurrent surges of oil prices in the international market.

It seems the government has not realised the most important factor in altering consumer behaviour related to EV adoption. Indian consumers, according to various market surveys, are interested in buying EVs but their interest has not translated into concrete action.

While the upfront cost is a major concern, consumers at the micro level also cited the lack of choices in the EV market. Currently, there are only about 10 electric/hybrid car variants available, compared to 54 in the US and over 100 in China, the EV world leader.

The biggest challenge, say market observers, is the absence of public awareness about the importance of shifting to eco-friendly transport and its benefits, as the initial cost is higher compared to fossil-fuel models.

Inadequate charging infrastructure is also a serious impediment. Bloomberg New Energy Finance (BNEF) estimates that the country of 1.3 billions has fewer than 500 charging points nationwide.

The Ministry of Finance is now finalising a plan to invest $600 million over the next five years to establish an EV backbone infrastructure. The funds will go toward new electric bus subsidies and to improve the public plug-in vehicle charging infrastructure.

However, a recent BNEF report noted that even with the new programme, the number of charging points will only reach 2,800 by 2022. Inadequate charging infrastructure for private vehicles highlights the opportunity for 2- and 3-wheel electric vehicles, which are setting the pace in India.

The move toward electric mobility cannot succeed unless consumers are convinced about the benefits of a sustainable transition. While an active government stance is critical in the early stage, there is more work to do besides giving out of subsidies if India wants to realise its dream of a climate-friendly future.

Nareerat Wiriyapong

Acting Asia Focus Editor

Acting Asia Focus Editor

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