India's EV industry is projected to grow at an astronomical CAGR of 90 percent and touch $150 billion by 2030, according to a recent report by consulting firm RBSA Advisors. In the face of these numbers, the time is ripe for the 2022 Budget to augment the growth of the EV industry.
On the cusp of a major transformation, this new ecosystem is already disrupting the existing vehicle market. More green mobility options will not only provide environmental benefits but also boost the technology industry and provide ample job creation opportunities in the coming years.
As per JMK Research and Analytics, electric vehicle registrations surpassed 50,000 units in a month in December 2021 alone. The electric two-wheeler category has seen especially positive growth, with an increase of 132 percent over 2020. As the e-bike segment continues to grow, the inclusion of low-speed electric two-wheelers amongst EVs and a larger manufacturing base, and the availability of labour and parts will give it the potential to scale up faster.
The Union Budget 2022-23 will play a crucial in setting the tone and blueprint for India's economic restoration in FY 2022-23. The government recently expanded the parameters for the production linked incentive (PLI) scheme to the automotive sector companies to increase the country's self-reliance and boost domestic manufacturing – which is likely to be the prologue to the Union Finance Budget. This action extends the possibility of a PLI scheme being offered to the e-bikes sector, helping manufacturers boost production and export capabilities.
Make available increased EV charging infrastructure
To meet the demands of the market, the simplicity and availability of EV charging infrastructure will be crucial to mainstream adoption of electric vehicles – ideally, one charging station every 3x3km area and every 20 km on motorways – hence incentivising infrastructure development and rules and schemes to promote battery swapping. Rationalising the tax (GST) system on batteries and other components used in the production of electric vehicles will help to contain costs, with the advantages being passed on to consumers.
Unified policy needed to encourage EVs
To boost the EV industry, the Indian Government has issued policies and regulations such as FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles), which was meant to finish in March 2022, but has been extended until 2024. However, the industry still needs a unified policy to encourage EVs across the country, making it easier for green transportation-focused enterprises to expand their presence.
In the coming years, EV financing will become the most important enabler for electric vehicle adoption. Attractive economics and government support have already boosted demand for EVs. Still, the commercial EV market, which is predicted to be a key growth vertical, is hindered by a lack of financing and incentivisation, which remains the biggest hurdle. With the potential to grow to $150 billion by 2030, further efforts to make financing, incentives, and subsidies more accessible would benefit the sector.
Electric vehicles (EVs) have acquired a lot of traction in recent years. The future looks bright, not just due to reduced carbon emissions but also the additional benefits to manufacturing and other ancillaries that faster adoption has to offer. As signs point to the EV sector taking centre stage, it is with great hope that EV, and especially e-bike, manufacturers look forward to Budget 2022.
The author is Co-Founder & CEO, EMotorad-ebike manufacturing startup.