We often talk about making China pay by boycotting Chinese products, but we all know how much the world relies on Chinese products. This dependency cannot be changed overnight. Self-reliance or Atmanirbharta cannot be achieved with a magic wand. It has to be built with a long-term plan, one industry at a time.
This time around, India has glued its eye on the automobile industry mainly because of two reasons: to reduce its oil import dependence and to tackle the pollution menace.
What Are The Problems With The Automobile Industry?
The root cause of this problem is oil. Oil is the most important source of energy on this planet. It has brought several economies down to their knees and on the flip side, also built shiny skyscrapers and deserts. But the problem with India is it is heavily dependent on crude oil to fuel its dreams and development.
India consumed nearly 206 million tonnes of oil in 2018-19. But how much of it is produced in India? The answer is less than 35 million tonnes. India depends on imports to satisfy the rest of the demand, also to blame is OPEC. They have cut supplies; the demand is rising but the supply is less which leads to rising in prices. Another reason for the exorbitantly high prices of petrol is the excise duty charged on it. Excise duty is almost 260% of the base price of petrol. Considering this, the manufacturing of Electric Vehicles (EV) in India is the need of the hour.
The second problem is pollution. Seven out of the top 10 most polluted cities in the world are in India. On top of that, as much as two-thirds of the deaths from air pollution in India is attributed to exhaust emissions from diesel-run vehicles. Petrol and diesel-run engines are highly insufficient as nearly 70% of the precious fuel is wasted; it can neither be recycled, recovered or reused. Moreover, the rising fuel prices will create a negative impact on the automobile industry, hitting the vehicle demand. Though we are late in implementing measures to these problems, we are headed in the right direction by adopting the Electric Vehicle strategy.
What Is India’s Electric Vehicle Strategy?
India has set a goal for itself and vis-Ã -vis the world. More than two million electric vehicles were sold in 2019; this number is only going to go up and India wants to make that transition too. One reason is that it concerns our future and the second reason is that we need clearer air. In 2019, the Indian Government announced a reduction in GST levied on EVs from 28% to 5% to encourage people to buy electric vehicles. As a result of this, sales grew by 20% in one year. Of course, there is still a long way to go. In addition to that, the government is also providing support and incentives to establish more car charging systems.
The year 2022 is considered to be a defining moment for Electric Vehicles in India as most automobile companies are launching electric vehicle models and India aims to increase the sale of EVs by 30% in 2022. The plan is in place, but there is a problem here: there is no Lithium in India. The element is not found in this part of the world.
So, while India manufactures most of the other components of an EV at home, it relies on countries including China, Taiwan and Japan for Lithium-ion batteries. This import adds to the cost of an EV and stands in the way of India’s goal to become a global hub for making EVs. Currently, China is at the number one spot but many countries are still hesitant of importing goods from China due to its policies and for India, it is an opportunity. The task before India is fourfold:
To access Lithium from outside China
To make Lithium-ion batteries at home
To find alternatives to this energy because Lithium reserves are limited
To become the world’s top manufacturer of EVs
The government has already announced a $1.4 billion plan to pave the path for this. Some of the major events that took place because of this are: Nationally, India is setting up its first Lithium Refinery in Gujarat. A Joint venture called Khanij Bidesh India Ltd has been formed between 3 state-run companies with an objective to acquire Lithium and cobalt mines overseas. India’s second biggest traditional battery maker Amara raja is looking to build a Lithium-ion assembly plant. Internationally, India has inked a pact with an Argentinian firm under which the firm will take projects related to exploration and extraction of products including Lithium.
The Central Government’s FAME (Faster Adoption of Manufacturing of Electric Vehicles) scheme provides a number of incentives to the manufacture and purchase Electric Vehicles as well as for building charging infrastructure. According to this scheme, EVs have to meet a certain requirement to qualify for the subsidy under this scheme. This scheme will not only increase the demand of EVs but also persuade the EV manufacturers to adhere to higher quality standards.
NITI Aayog has proposed that two-wheelers sold in India after 2025 should be electric-ones. To encourage this, a plan has been put forth to include space for charging stations in all the high-rise buildings, hospitals, malls, Commercial Buildings that will be constructed from now on.
With this robust strategy, investors are tempted to set-up manufacturing units in India. Ola-electric, India’s largest cab-hailing company, has begun the construction of World’s largest two-wheeler factory in Bengaluru. One of the most valuable automotive company in the world, Tesla announced that it will be setting up a manufacturing unit in India. Veteran companies like Bajaj, Hero MotoCorp, TVS and Mahindra have entered the segment either by investing or launching their own products.
To intensify the effectiveness of this mission, Nitin Gadkari startled the automotive industry by saying that he intended for India to move to 100% electric cars by 2030. He further added that, “I am going to do this, whether you like it or not. And I am not going to ask you. I will bulldoze it". Indeed, there is a lot of activity and energy in this space and we hope that the dynamics work in the favor of India to build an EV Landscape.
