Charging Up: India prepares for an EV future

India prepares for an EV future

In view of the growing environmental concerns associated with fuel-based mobility, the government has developed a policy framework and taken several other initiatives to create an e-mobility ecosystem in the country. The Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme, currently in its second phase, provides demand incentives for the purchase of electric vehicles (EVs) and promotes the creation of enabling EV charging infrastructure. The scheme primarily aims to provide a fillip to e-mobility in public transport, with the majority of incentives under the scheme earmarked for e-buses and e-three wheelers. Apart from this, the Ministry of Power has recently approved the revised guidelines for EV charging infrastructure, which allow setting up of EV charging stations as a delicensed activity and also allow setting up of charging infrastructure in homes and offices.


FAME II, the overarching framework for promoting e-mobility in the country, was approved by the union cabinet in March 2019. The scheme entails an outlay of Rs 100 billion for the period 2019-20 to 2021-22, which is around ten times the outlay under FAME I. The scheme provides demand incentives on the purchase of hybrid vehicles and EVs including electric buses, e-rickshaws, and two-, three- and four- wheelers. More than half the allocation under FAME II has been earmarked for e-buses and e-three-wheelers, including e-rickshaws, with a focus on green mass transport systems. The scheme also supports the development of charging stations in the country.

With regard to the likely impact of FAME II, NITI Aayog’s report, “India’s Electric Mobility Transition”, prepared along with Rocky Mountain Institute, noted that vehicles eligible under FAME II can cumulatively save 5.4 million tonnes of oil equivalent over their lifetime, resulting in cost savings of Rs 172 billion. This is expected to result in a net reduction of 170 petajoules of energy and 7.4 million tonnes (mt) of CO2 emissions over the deployed vehicles’ lifetime. Besides this, the report presents the key takeaways from the implementation of FAME I. It points to some of the likely reasons for the limited uptake of EVs under FAME I. These include availability of very few EV models in the country, a limited number of charging stations, and lack of awareness regarding incentives among manufacturers and customers.

Charging infrastructure

A robust charging infrastructure is imperative for a wider uptake of EVs in the country. To this end, the government has been taking initiatives to promote the setting up of EV charging stations. Recently, in October 2019, the Ministry of Power released the revised guidelines for EV charging infrastructure, which supersede the guidelines released in December 2018. Among other things, the guidelines envisage the setting up of at least one charging station of 3 km2 in cities, one charging station at every 25 km on both sides of a highway, and a fast charging station for heavy vehicles every 100 km on both sides of highways. Further, the setting up of public charging stations will be a de-licensed activity and could be set up by any individual, subject to the meeting of technical, safety and performance standards. The guidelines allow setting up of private charging stations at homes and offices.

At the industry level, several public and private majors have announced plans for scaling up their EV charging business. Significantly, NTPC Limited has placed an order for setting up 400 charging stations across cities and highways, and is also setting up a pilot for battery swapping and charging for e-autos. Besides, EESL is working towards strengthening the charging infrastructure, with the objective of setting up at least 3,000 charging stations over the next two years. It has signed MoUs with various urban local bodies in Hyderabad, Noida, Ahmedabad, Jaipur and Chennai, and is in discussion with others for the development of public charging stations in their respective areas. Apart from this, Tata Motors and Tata Power have partnered for setting up around 300 EV charging stations by the end of 2019-20.

Other developments

The Goods and Services Tax (GST) Council has reduced the tax rates on EVs and chargers, effective August 1, 2019, to make EVs more affordable. The tax rate on EVs has been reduced from 12 per cent to 5 per cent while that on EV chargers has been reduced from 18 per cent to 5 per cent. Besides this, under the union budget 2019-20, the government announced an additional income tax deduction of Rs 150,000 on the interest paid on loans taken to purchase EVs, resulting in a total benefit of around Rs 250,000 over the loan period.

With regard to batteries for EVs, the Ministry of Finance has approved a plan by NITI Aayog to subsidise battery manufacturing in the country. The proposal, which is currently pending with the cabinet for approval, entails providing an annual subsidy of up to Rs 7 billion to manufacturers. The plan is to set up 50 GWh of battery capacity in the country and commission the battery manufacturing plants by 2022. Notably, various start-ups and energy solution providers are also manufacturing lithium-ion batteries.

In order to promote e-mobility across government establishments, EESL is looking to electrify the 500,000 cars used by the government. It has already completed the procurement of 10,000 e-cars. The price discovered by EESL for EVs through the tendering process was 25 per cent lower than the retail price of similar cars in the market. Besides, EESL has signed agreements for deploying e-cars with various PSUs, government departments, and the governments of Delhi, Haryana, Jharkhand, Madhya Pradesh, Uttar Pradesh, Andhra Pradesh, Maharashtra, Telangana, the Andaman & Nicobar Islands, Gujarat, Odisha, Chhattisgarh and Kerala.

Overall, at the industry level, new and established industry players in the automotive, charging infrastructure, battery and mobility service segments are making investments and forging partnerships to develop and test new products and business models. Design innovations and testing products suitable for the Indian market have given an impetus to the electric two-wheeler segment. As per market estimates, electric two-wheeler sales almost doubled in 2017-18 to 54,800 as compared to the previous year.


As per India’s Electric Mobility Transition Report, EV sales penetration of 70 per cent for commercial cars, 30 per cent for private cars, 40 per cent for buses, and 80 per cent for two- and three- wheelers by 2030 could be attainable. The decline in prices, greater economies of scale, government intervention and collaborative industry action can give the required fillip to the segment. To this end, there is a need to increase customer awareness and provide access to a variety of EV options. To increase domestic manufacturing, EV research and development specific to Indian conditions must be taken up.

The government, at the central, state and city levels, will play a key role in electric mobility transition. FAME II is a strong policy but additional action needs to be taken by the government to ensure the adoption and expansion of electric mobility. This includes the deployment of high quality advanced batteries, introduction of fiscal and non-fiscal incentives for phased manufacturing of EVs and batteries, and creation of a phased manufacturing plan. The government also needs to competitively allocate incentives, ensure finance availability particularly for commercial EVs, and raise awareness on EVs.

To conclude, despite the euphoria around EVs, there are several policy and industry roadblocks in India’s EV ramp-up. The biggest hurdle is a near non-existent EV ecosystem, with critical components such as battery cells, motors and controllers being largely imported from China. Going forward, the development of public charging stations will be critical to support the planned EV growth.