Post COVID Support Required to Electric Vehicles: FICCI Recommendations to Government

Jul 02, 2020

• Continuation of FAME II for Two More Years, Higher Short-Term Booster Incentives for Consumers, Support for In-House R&D & More

NEW DELHI, 2 July 2020: As demand and investments in the Electric Vehicles (EVs) sector are severely hit due to disruptions caused by COVID-19, FICCI has suggested to the Government, a series of measures to ensure continuity of the EV growth roadmap and achievement of the targets as envisioned by the Government for the sector in the next decade. These suggestions have been submitted to NITI Aayog, Department of Heavy Industry, Ministry of Road Transport and Highways and other relevant authorities in the Government.

FICCI apprehends adverse impact on the introduction of this green technology in the country's EV sector due to factors such as reduction in demand for automobiles, higher risk aversion among customers towards new technology, disruption in supply chain, and uncertainty in oil prices due to COVID-19. There is also likelihood of reduction in demand for shared mobility leading to reduced demand for E3W and postponement of investments in EV technology by local component makers. 

Despite these short term setbacks, FICCI strongly feels that India must continue to encourage EVs along with all other Electrified Vehicle technologies (xEVs), such as Plug-in Hybrid Electric Vehicles (PHEVs), Strong Hybrid Electric Vehicles (SHEVs) & Fuel Cell Electric Vehicles (FCEVs) and electrification of the transport sector due to the long-term vision of our nation towards electric mobility to lessen air pollution, achieve fuel security and technology leadership in this sector.

FICCI EV Committee has submitted its recommendation to the government to seek immediate support from policy makers to enhance attractiveness for EVs in short term and to encourage continued investments in the sector. FICCI has requested the government to take certain steps urgently to prevent a derailment of the sector and to help create demand; so that India can attain leadership in EV technology and sales.

Mr Shekar Viswanathan, Chairman, FICCI Electric Vehicle Committee and Vice Chairman & Whole Time Director, Toyota Kirloskar Motors said, "Worldwide the automobile sector is undergoing transformation with various technologies and it is essential that India is also a part of this change and take a leadership role. Therefore, for innovative and vibrant industry and to attract investments for newer technologies, it is necessary that Government policies are technology agnostic. The key national objective to be met is the reduction of carbon emission. Just as the government has wisely introduced BS VI fuel ahead of time, India must encourage all those technologies that will progressively reduce carbon footprint."

To ensure sustainability of EV off-take in the country as well as possible measures to attract investment for EV parts manufacturing specially in the wake of global development, Ms Sulajja Firodia Motwani, Co-Chair of FICCI EV Committee and Founder and CEO of Kinetic Green said, "We should pitch to encourage existing auto component makers to invest in EV components and also to attract investment in India for EV and EV components, especially battery, powertrain components like electric motors, controllers, chargers, converters etc. For this to happen, it is critical that steps are taken urgently for demand creation for EVs in India is created, otherwise we will suffer a chicken and egg situation."

Mr Palash Roy Chowdhury, Co-Chair, FICCI EV Committee and Co-Founder, Chairman & MD of Smart E said, "We should outline a clear nationwide policy to phase out old - pre BS IV ICE vehicles being used in public transport. Under this policy a set of pilot cities (with most pollution and urban congestion) can be selected with a time-bound policy roadmap to mandatorily phase out polluting public transport vehicles. The roadmap should be designed to incentivise vehicle conversion/migration to environmentally sustainable electrified vehicle technologies starting with the lowest capital impact category, such as 2/3-wheelers, followed by public transport buses and then 4W taxis."

Majority of road-based public transport in the country continues to use large-scale ICE vehicles, including significantly high number of polluting ones. Due to vehicles not being phased out in a timely manner, our cities continue to bear the brunt of polluting vehicles while causing delays in adoption of newer, efficient mobility systems, thereby limiting the overall growth potential of emerging new technologies.

 

FICCI recommendations submitted to the government

1. Continuation of FAME II scheme for 2 more years to 2025, along with short term 'Booster Incentives' under Fame II for 12 months to enhance demand. This should be done within the overall existing budget allocation of Rs. 10,000 cr for Fame II. This booster incentive will help create demand for EVs in short run and continue momentum.
2. Extend subsidy support for E2W and E3W with Swappable Battery to encourage EV eco-system creation.
3. Encourage States to finalize EV policies considering all electrified vehicle technologies and implement EV policies already announced by the States, including waiver of Permits for EVs, which is already notified under CMVR.
4. Retail finance for Electric Vehicles should be made part of Priority Sector Lending, for higher financing availability by banks to EVs.
5. To promote e-buses, a review should be taken to improve the e-buses procurement criteria and scheme design under FAME II with industry consultation.
6. INR 10 crores R&D support towards setting up in-house R&D Infrastructure to come up with Make in India Product and develop advanced technology for EV two wheelers
7. Create a policy/guideline to incentivise all major e-commerce players convert their last-mile delivery operations to all-electric by 2025, beginning with year-wise targets (20% by 2021, 50% by 2023 and 100% by 2025).
8. In order to ensure quality, only manufacturers with DSIR approved R&D center to be qualified to get their products approved under FAME II.
9. Extend adequate & proportionate support to all xEV technologies in order to promote investments for electric powertrain parts localisation and announce clear policy to promote battery cell manufacturing in India to incentivize local players to invest in this area and create roadmap to move away from import of lithium ion cells.