UPSC Daily Editorial Analysis | 4 June 2022

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What the article is about?

  • Talks about the progress in India’s EV policy and the way ahead.

Syllabus: GS-II Government policies and interventions, GS-III Sustainable development

EV Policy:

  • India’s push for electric vehicles (EVs) was renewed when phase-II of the Faster Adoption and Manufacturing of (Hybrid and) Electric (FAME) Vehicles scheme in India, with an outlay of ₹10,000 crore, was approved in 2019.
    • This was significant since phase-I, launched in 2015, was approved with an outlay of ₹895 crore.
  • India was doubling down on its EV ambitions, focusing on cultivating demand for EVs at home while also developing its own indigenous EV manufacturing industry which could cater to this demand.
    • Initially envisioned for three years, FAME-II got a two-year extension in June 2021 owing to a number of factors including the pandemic.
    • It aims to support 10 lakh e-two-wheelers, 5 lakh e-three-wheelers, 55,000 e-four-wheeler passenger cars and 7,000 e-buses.
  • Three years into FAME-II, the numbers have been lagging far behind the original three- year target.
    • As a part of FAME-II, the government has made a push for indigenous manufacturing with a number of automakers answering the call
    • Three-wheeler EVs like e-autos and e- rickshaws account for close to 65% of all EVs registered in India.
    • In contrast, two-wheeler EVs come at a distant second with over 30% of registrations and passenger four-wheeler EVs at a meagre 2.5%.
  • Under the targets for FAME-II, e-three-wheelers have crossed over 4 lakh vehicles of the 5-lakh target since 2019.
    • The EV registrations data show that Assam, Bihar, Delhi, Uttar Pradesh and West Bengal account for close to 80% of all e-three-wheeler registrations, with U.P. accounting for close to 40% of all registrations.
    • Incidentally, these five States are characterised by high population density and shortage of affordable public transport. Indigenously designed and produced, e-three-wheelers like e- rickshaws have become a common sight in these States.
    • All five States provide road tax exemption of 100% and on registration fees.
    • Assam, Delhi and West Bengal have linked incentives to the battery size (in kWh) with additional benefits on interest rate on loans and scrappage incentives in some cases.
    • U.P. has gone a different way with its subsidies, offering 100% interest-free loans to State government employees for purchasing EVs in the State and 30% subsidy on the road price of EVs to families with a single girl child.
    • To promote sales of EVs manufactured within the State, U.P. exempts SGST on all such vehicles. 

Way Ahead:

  • Subsequent EV policies must therefore pay special attention to passenger safety concerns.
    • Local manufacturing enterprises often lack the necessary resources or the motivation to invest in design developments focusing on safety.
  • While the current State-level policies have been instrumental in increasing local e-three-wheeler manufacturing, they have led to an increasingly fragmented manufacturing industry with non-uniform standards akin to the formative years of motor vehicles in the early 20th century.
  • Future EV policies must therefore take into account the existing and emerging stakeholders on the demand and supply sides for effective implementation.

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