The Indian Government has given green light to a new electric vehicle scheme with tax reliefs aimed at positioning the country as a prime manufacturing hub. The development comes at a time when the Asian giant seeks to attract foreign money for local production from the likes of Tesla. India plans to lower import taxes on select EVs for companies committing to investments of over $500 million and establishing manufacturing facilities within three years. The landmark decision not only aims to attract heavyweights like Tesla, but also underscores India’s stance in attracting foreign investment to drive local production.
India is the world’s biggest electric vehicle market in the making. It is not just focusing on becoming the largest EV market, but also working towards building the world’s most robust EV ecosystem.
The year 2023 was a landmark- of-sorts in India’s quest for greater EV adoption. It recorded a significant uptick in electric vehicle sales, with over 1.5 million units sold – a jump of 50 per cent from 2022.
The overall share of EVs in India’s auto sales has risen sharply to 6.38 pc in 2023, from 1.75 pc in 2021. This is indicative of EVs finding a greater acceptance among the country’s automobile-purchasing class. Hence, the target of adding over two million EVs to the domestic market this year looks easily attainable.
Prime Minister Narendra Modi once again turned attention to the EV segment very recently when he told a gathering of businessmen and executives at Bharat Mobility Global Expo to “think out-of-the-box and work in collaboration”. Perhaps, the biggest takeaway from the PM’s address was his call for automakers to ensure that there is a made-in-India vehicle running across most of the markets globally.
India is expected to become the world’s largest electric vehicle market by 2030, surpassing the likes of China and the United States. The EV market is expected to grow at a compound annual growth rate of 49 per cent, a trajectory which will lead to annual sales of close to 10 million units by 2030. Presently, India is the third-largest automobile market in the world. However, EV penetration is at just about 3-5 per cent, even as the country is dubbed as the fastest-growing electric vehicle market. Niti Aayog has set a target of ensuring 30 per cent EV penetration in the country by 2030.
The support being provided by the Modi Government through its FAME scheme is boosting the uptake of electric vehicles, while an incentive programme for advanced battery manufacturing is poised to drive down battery costs, further fuelling the shift towards electric mobility. Under the FAME (Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India) scheme, manufacturers sell discounted EVs and then seek the subsidised amount from the Centre. The Government is set to unveil a new scheme to incentivise electric vehicle purchases and expand charging infrastructure.
Experts are foreseeing an investment of Rs 94,000 crore ($12.6 billion) dedicated to the electric vehicle ecosystem over the next five years. In the interim Budget presented by Finance Minister Nirmala Sitharaman recently, EV sector was given the expected boost. Care was taken to not just focus on electric vehicles as a standalone subject, but to create a robust EV ecosystem in the country.
