The Indian government appears to have reversed out of its commitment that, by 2030, only electric vehicles (EVs) would be sold in the country.
This commitment, part of a pledge made by the countryâs Minister of Power in March 2016, has long been considered over-ambitious by many of Indiaâs car manufacturers and infrastructure specialists.
When the governmentâs long-mooted official policy on the development of the EV sector failed to materialise, as promised, by the end of February this year, this was seen as tacit acknowledgment that a rethink was on the cards, one that would establish more realistic objectives.
With the official policy announcement cancelled, all of the concerned parties are now awaiting the formal delivery of a series of less-stringent government guidelines, which will act as a route map towards the wider adoption of environmentally-friendly vehicles.
A key element of this is expected to be a series of incentives intended to help develop the countryâs charging infrastructure.
This will address one of the prime concerns over meeting the governmentâs 2030 deadline – the fact that the country only has 25 EV charging stations in operation, with planning permission in place for a further 400, almost all of them in or around Delhi or New Delhi.
One particular change expected to form a core part of these new guidelines is the re-designation of charging station operators from electricity providers to vehicle-service providers.
This lexicographical sleight-of-hand is seen as the simplest way to dodge the provisions of the countryâs Electricity Act, which specifies that only specially-licensed distribution companies can sell power.
With the reins notably loosened, this would allow existing businesses in the vehicle-service sector – notably garages – to providing charging services.
Such businesses would also possibly be entitled to buy electricity at a discounted rate under another proposal expected to be adopted as part of the upcoming guidelines.
Proposals are also expected with regard to tackling the currently prohibitively high cost of EV-compatible batteries.
At present, imported batteries, which can power a vehicle with its air-conditioning running for up to 140km, cost about US$4,600 per unit.
Given that the average annual salary in India was estimated to be about $3,000 in 2017, this clearly prices EVs out of the reach of all but the countryâs most affluent residents.
In order to remedy this, the Indian government has wooed a number of international battery producers with a view to establishing domestic manufacturing facilities.
Already in the frame for such a move are two Japanese firms – Suzuki and Panasonic – as well as BYD, Chinaâs massive Shenzhen-headquartered rechargeable-battery producer.
The arrival of such manufacturers, together with a predicted per-annum drop in battery costs of 15-20% for the foreseeable future, is expected to go a long way towards making the countryâs EV aspirations far more realistically achievable.
In addition to delivering battery-manufacturing facilities, China could well play a more extended role in developing Indiaâs EV sector.
The mainland is already the worldâs largest producer of EV vehicles, with a global market share in excess of 60%.
With some seven million EVs expected to be in use across China by 2025, the country is already gearing up to create a vast supportive eco-system, which will include battery manufacturing, recycling and charging infrastructure.
The sheer size of the mainland market will inevitably create a cost-effective resource that India can cherry-pick in order to drive its own EV development.
â HKTDC Research By Mitra Dave, HKTDC Mumbai Consultant.