The government seems to have softened its stance on the time frame for transition to electric vehicles (EVs).
The Ministry of Heavy Industries, the Ministry of Road Transport and Highways, the power ministry, and the NITI Aayog — tasked with the policymaking and implementation of the government’s e-mobility plan — have extended an olive branch to the beleaguered automobile industry by agreeing to a “softer, pragmatic, phase-wise approach”. Under the revised plan, highly-polluted urban cities will be targeted first.
The change in stance follows a strong opposition by automakers of the proposed government plan to ban two-wheelers (below 150cc) and three-wheelers by 2023 and 2025, respectively, and replace them with battery-operated EVs. The industry had said the move was not well-thought-out and would create unwanted disruptions in a market where infrastructure and ecosystem for EVs was non-existent.
“We are awaiting a road map that the industry is supposed to submit. We are clear about our goals and targets. We want to do this in partnership with the private sector,” Amitabh Kant, CEO, NITI Aayog, told Business Standard.
"We have become a fully importing nation in mobiles, telecom equipment, and PV Solar because of the wrong policies pursued earlier. We will never allow this to happen in the case of electric vehicles. We will build size and scale, and pursue Make in India for both domestic and export markets. We will make India an EV hub for global markets," he added.
The Society of Indian Automobile Manufactures (Siam) has commissioned global consulting firm Boston Consulting Group (BCG) to prepare a comprehensive report on EVs encompassing challenges and opportunities, and the approach India should adopt for e-mobility.
BCG is likely to submit its report in a month. Alluding to the incentives announced by the government to spur EV adoption, Kant said the government had done everything possible to clean up its cities, improve the quality of life for citizens, reduce oil imports, drive Make in India, and create size and scale. “It is now for the private sector to do its bit. It must take leadership position in becoming the champions of clean mobility,” Kant said. Rajiv Bajaj, managing director at Bajaj Auto, who has been vocal in his criticism of the government’s e-mobility road map, said he was relieved to learn the government didn’t plan to ban ICE vehicles, and satisfied with the policymaker’s nuanced stance involving a phase-wise roll-out.
“The previous expectation of a hard stop from 2023 and 2025 seems to be no more there. Rather, a very pragmatic approach to take India to a leadership role in electric two- and three-wheelers is what the government is looking at. I am all for it, as we are the largest two- and three-wheeler market in the world,” Bajaj told Business Standard.
He said he recently met officials in the heavy industries, road transport, and power ministries and was assured that the government was not banning ICE vehicles. They clarified that they were keen on EVs but it had to be done in a pragmatic way and had to be a win-win for all. “For a complete closure, I also wanted to have the confirmation from the NITI Aayog as the proposal had originally come from their side. And I was very pleased to hear the very same stand from the NITI Aayog as it was part of the inter-ministrial committee which came up with the proposal," he said.
The calibrated approach of first targeting the large polluted cities will put to rest the fears of making the capacity for ICE vehicles redundant and potential job losses, Bajaj pointed out. “While the urban market will move to EVs in a phased manner, growth of rural, semi-urban and exports will more than compensate for that. This will ensure utilisation of the current installed capacity and save current jobs. India sold 211 million two-wheelers, 700,000 three-wheelers in 2018-19,” according to Siam.