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We should aim for 100 per cent transition to electric two-wheelers in next 5-7 years and Making India A Manufacturing Hub for EV: Tarun Kapoor, Advisor to Prime Minister, PMO

Jun 06, 2023

  • 87 per cent EV penetration in new vehicle sales by 2047; 1 crore jobs by 2030: FICCI-YES BANK report
  • Industry Seeks Extension of FAME Subsidy for Another 5 Years

NEW DELHI, 06 June 2023: Mr Tarun Kapoor, Advisor to the Prime Minister, PMO today stated that time for electric vehicles (EVs) in the country has come and India needs to move in this direction mainly because of our energy security and environmental concerns. "From government side also, we now want to focus on driving this sector so that not only do we have more and more electric cars, buses and two-wheelers on the road, but we also become a manufacturing hub for the world," he added.

Addressing the 'FICCI Roundtable on Electric Mobility', Mr Kapoor while highlighting the potential of the Indian electric market said that the auto sector in India is already well established which means all leading players are already in the market. "It is just about transitioning which should be easy and all stakeholders need to work together to strengthen the EV sector," he stated.

Mr Kapoor further stated that in case of 2-wheelers, we should aim to transition close to 100 per cent in next 5-7 years and there is no reason why we can't do it, he emphasized. "The price has come down slightly as India is a very price sensitive market and therefore, the price has to come down further. The support from government including subsidies, taxes and policy reforms will not take us beyond a point but it is the industry who must take it forward," he asserted.

Speaking on the adoption of electric vehicles in public transport, Mr Kapoor said that the government will come out with policies to get public transport to most of the Indian cities. We will also ensure that this happens with electric vehicles and not with diesel only. "You can look forward to very large support from the government so that not only we will see transition from diesel buses, but we will see more and more electric public transport which is missing," he added.  

He also urged the industry for more investments in battery manufacturing along with the entire value chain of battery manufacturing. "Battery manufacturing requires more innovation and not being dependent on lithium batteries only," noted Mr Kapoor.

Mr Kamran Rizvi, Secretary, Ministry of Heavy Industries, Govt of India said that Indian automobile industry is a matter of pride for the country. He stated that electric vehicle sector in India has great chance to become a leader and urged the industry to focus on making batteries lighter and reduce the dependence on rare earth magnets which are currently being imported. "EVs present a great chance for India to compete with the world and let us ensure that the Indian EV story become the global EV story," added Mr Rizvi.

Industry present at the roundtable sought extension of FAME II subsidy scheme by another 5 years when it comes to an end by March 2024. This was the ask from the industry across the XEV segment i.e. 2W, 3W, 4W and Buses.

Dr Hanif Qureshi, Joint Secretary, Ministry of Heavy Industry said that government is looking at feedback from the stakeholders for the future roadmap for EV sector when FAME II comes to an end in 2024. He said that we are discussing what are the technologies and areas to be supported going forward.

Mr Sudhendu Jyoti Sinha, Adviser, NITI Aayog stated that in the last 5 years, the kind of pace which we have been able to achieve that is what makes the world to look up to India as happening place. "In times to come, the EV sector is going to be major growth story for India, and you (industry) will be the partner to it," he added.

Ms Sulajja Firodia Motwani, Chair, FICCI Electric Vehicle Committee and Founder & CEO, Kinetic Green Energy & Power Solutions Ltd said that as the global economies and India work towards achieving their net zero goals, we strongly believe that e-mobility has a great role to play in India's success and dominance in its green vision.

Mr Manish Sharma, Chair, FICCI Electronics & White Goods Committee and Chairman, Panasonic Life Solutions India & South Asia stated that we have to ensure that the concept of total cost of ownership in EVs is explained to consumers in a simpler manner.

Mr Shailesh Pathak, Secretary General, FICCI appreciated the adoption of electric vehicles over the last decade and set forth the aspiration of full transition to EVs in the next decade, fueled by the entire EV ecosystem. This would reduce fossil fuel imports and reduce emissions, he added.

Mr Arun Agrawal, Country Head, Institutional and Government Banking, YES BANK said, "YES Bank is pleased to partner with FICCI for developing an accelerated roadmap for the EV sector. The 'India@2047: Electric Mobility' study highlights the collective resolve of the government and industry to move towards our net zero goals by fostering innovation and collaboration to leverage opportunities and scale challenges. Focusing on India's strengths, our transition to electric mobility will require sustained efforts towards R&D, structured approach to value chain localization, collaborative ecosystem development, and access to finance."

FICCI-YES BANK report 'India@2047: Electric Mobility' was released during the event. 

Key highlights of the report:

FICCI's Electric Vehicle Committee and YES BANK, establishes a vision for e-mobility in India for 2047, and an accelerated roadmap to achieve the same. It identifies key aspirations the sector has potential to achieve over the next 25 years - from market development (87% xEV penetration in new vehicle sales), to local industry development (where >85% of the xEV value chain can be localized), and being a key pillar towards India's net zero goals.

Segment

XEV Penetration level (%)

in New Vehicle Sales by 2047

2W

90

3W

91

Passenger vehicles

79

Buses

67

The report identifies opportunities offered by a >20 mn domestic vehicle market, and the global shift towards electrification, supported by tailwinds such as tightening emission norms (CAFEII, RDE, BS6.2), central & state incentives on vehicle purchase, demand aggregation, and growth of the TCO attractive fleet segment. It recognizes local industry developing due to need of products made for the Indian drive cycle, schemes such as PLI and localization norms for demand incentives. It further notes technology partnerships with advanced markets and starting of R&D focus, especially in the emerging PE/VC funded startup ecosystem.

However, the report also finds several challenges that remain to be fully tackled: ranging from high upfront cost & constraints on vehicle finance, safety concerns, nascent global inroads; to limited access to key raw materials, R&D and skillsets combined with low order volumes, rapid tech. evolution; and issues in charging infrastructure development & utilisation. It offers a roadmap of solutions to these issues to achieve the aspirations of the sector, developed through extensive stakeholder consultations. For this, the report identifies milestones to be achieved in the short-, medium- and long-term, especially segments and value chain products/processes to be focused, and suggests actions that firms, the industry and policymakers can undertake over these periods.

For cost alleviation and investment drive, the report suggests demand incentives till significant xEV penetration and emissions-based taxation, while also creating credit pathways for financing xEVs. Development of a vibrant resale market and open data on vehicle performance can also help ease vehicle finance & insurance. Vehicle & component servicing & longer warranties, and expanding quality tests to all vehicle classes, can allay concerns on safety & reliability. The report also suggests mandating charging infrastructure in public parkings, and a greater mandate for electricity utilities for upstream infrastructure creation and green power integration. To tap global markets, the report suggests focusing on 2 & 3 wheelers, tractors and LCVs; and value chain products/processes using India's material/ mineral strengths - supported by export incentives/promotion & development of test capacity for global standards.

On the supply side, the report identifies local R&D ecosystem development in priority areas as a key imperative - including for recycling and alternate energy sources including sodium/ hydrogen etc.; along with a structured approach to localization including capital equipment. Companies can explore flexible production and design stage collaboration for components, while increasing R&D investment through small teams and startup collaboration. Policymakers can institute R&D incentives/tax rebates, and create/fund infrastructure for prototyping, testing, pilot plants etc. The report also suggests collaborative focused skill missions with Academia, Start-ups, Skill Councils, & MSMEs; and collaborative procurement at component & material level.

The report thus identifies a host of sustained efforts - combining policy reform; skill-building and capability development; Market making for export, recycling, charging; Agency reform; and Implementation mechanisms ranging from self-adoption, collaboration to state scorecards - for India to reap the benefits of the transition to e-mobility in an accelerated manner.

 

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