PM E-DRIVE and the promise of sustainable development through electric mobility

Sustainable development through electric mobility.

This article is authored by Alok Kumar, former Union Power Secretary of India and Director with The Lantau Group at present.
“Sustainable development is a fundamental break that’s going to reshuffle the entire deck,” said French businessman François-Henri Pinault, acknowledging the challenges associated with the transition to green technologies, especially regarding affordability and import dependencies for developing countries. However, recognising the full potential of this opportunity reveals that these nations are poised to lead the industry and shape the future.
Electric mobility is one such technology that holds immense promise for India. It provides a viable solution for reducing oil imports through locally available renewable energy while generating significant employment opportunities. According to recent government estimates, the electric vehicle (EV) industry is projected to contribute to overall economic growth by creating 50 million direct and indirect jobs by 2030, alongside putting 10 million EVs on the road during the same period. Another report indicates that the EV industry attracted $6 billion in 2021 and is expected to reach $20 billion by 2030.
India has the potential to transition to electric mobility swiftly, as its motor vehicle ownership stands at about 60 per 1,000 people, compared to 230 in China and 700-800 in developed countries. The country also possesses abundant solar and wind resources for generating green electricity, a robust auto parts industry, and a large pool of young workers eager to be trained for new job roles. Many of these jobs will emerge in areas such as servicing, maintenance, charging of EVs, and battery recycling.

Where do we stand today? EV penetration in India, measured as the percentage of EV sales relative to total light vehicle sales—including passenger vehicles and light commercial vehicles—was only about 1.1% in 2022, compared to 17.3% in other Asian countries. In China, EVs account for nearly 41% of their new car market, with battery electric vehicles making up 26.4%. India still heavily relies on imports for battery cells, raw materials, and other components for EVs.
The government has prioritised the promotion of electric mobility as a key strategy for energy transition and local manufacturing growth. The FAME scheme was launched in 2015, followed by the Production-Linked Incentive (PLI) scheme for the automotive sector, including EVs, in 2021. Additionally, another PLI scheme was introduced in the same year to support local manufacturing of advanced chemistry cells for batteries. GST on EVs is set at only 5%, compared to 28% on hybrid and CNG vehicles, and 49% on ICE vehicles. Special tariffs, without the burden of cross-subsidies, have also been established for electricity supplied to public charging stations for EVs, and many state governments have waived road tax on EVs.
Nonetheless, the sector faces challenges, including high upfront capital costs, range anxiety due to inadequate charging infrastructure, and a slow pace of local manufacturing. Recognising its potential for clean economic growth, the government has introduced several initiatives to enhance focus. However, India must accelerate its efforts to overcome these bottlenecks, as the current pace is a significant hurdle despite over 90% of EV users charging their vehicles at home. Boosting charging infrastructure, both in terms of the number of chargers and their accessibility, as well as the speed of charging, is essential. Charging infrastructure has grown over the last few years, increasing from over 6,000 in March 2023 to approximately 15,000 today, and the outlook for the next few years remains promising.
The new PM E-DRIVE initiative has been launched with an outlay of INR 109 billion for two years – significantly higher than the INR 100 billion allocated for five years under FAME II. It exclusively targets EVs, unlike FAME, which also included hybrid vehicles, and sets the course for a mobility future powered by EVs. providing subsidy support for two- and three-wheelers and electric buses, with a stronger emphasis on adding new charging stations.
The Ministry of Petroleum & Natural Gas is in the process of deploying 22,000 public EV charging stations, expected to be installed by December 2024. Public sector oil companies and private sector players like Tata Power, Jio BP, and Adani Power have announced plans to install about 200,000 chargers. Several public and private sector projects are underway, supported by government schemes aimed at transforming the grid’s composition. The PM Suryodaya scheme, promoting household participation in this transition, is gaining excellent traction.
The new initiative aims to support a total of 88,000 new fast charging stations—22,100 for four-wheelers, 48,400 for two- and three-wheelers, and 1,800 for e-buses. It also seeks to support a total of 88,000 new fast charging stations—22,100 for four-wheelers, 48,400 for two- and three-wheelers, and 1,800 for e-buses. The goal is to increase market share of electric two-wheelers and three-wheelers to 10% and 15%, respectively, by 2026. The government has also launched a scheme with an outlay of INR 34 billion to establish a payment security mechanism to support the induction of e-buses in state transport corporations.
The Ministry of Power’s revised guidelines for expanding the charging infrastructure emphasise the importance of charging infrastructure in all potential locations, including multi-storeyed residential buildings, and promote open communication protocols to enable interoperability of EV chargers. They also mandate timebound provision of new connections by distribution utilities for setting up charging stations, offer a 30% discounted tariff for charging during solar hours, and encourage new technologies like vehicle-to-grid discharging.
Private players are also innovating sales models to address the barrier of higher initial capital costs. Recently, a joint venture led by an Indian industrial house announced a ‘battery as service’ model, charging based on distance travelled, which reduce initial costs by approximately 40%, and includes a buyback price of up to 60% after three years or 45,000 km, besides one year of free charging.
There’s renewed interest in enhancing the local content in EVs sold in India. Several foreign manufacturers have shown interest in setting up their facilities here. Some manufacturers who were indifferent to EV technology have now come on board and announced new electric models to be launched soon. PM E-DRIVE also focusses on a phased manufacturing plan, and stricter compliance of local content conditionality for availing subsidy under the scheme
India’s ambition to become a significant global player in EV manufacturing should be grounded in a strategy that prioritises domestic sales. This requires addressing critical gaps, such as the insufficient charging infrastructure and providing sustained support for local manufacturing. Diverting attention to hybrid technologies— which are merely incremental and lack substantial long-term value in combating climate change— will hinder the country from reaping the enduring benefits of electric mobility.
Disclaimer: Views and opinions expressed in this article are solely those of the original author and do not represent any of The Times Group or its employees.