NITI Aayog's electric mobility proposal irks India's auto industry

Government think-tank NITI Aayog’s proposal calling for replacement of various categories of vehicles by electric vehicles (EVs) within a certain time has irked India’s auto industry and prompted the Confederation of India Industry (CII) to seek a wide consultation before finalising the plan. 

In a meeting last week with representatives from NITI Aayog and Department of Heavy Industries (DHI), top officials from CII and from auto companies, including Mahindra & Mahindra, Bajaj Auto, Maruti Suzuki India, TVS Motor, and Toyota Kirloskar Motor expressed concerns over the timing of the move and the haste with which the government is pushing through electric mobility.

While some mentioned scale and EV costs as the biggest hurdle in meeting the targets, others cautioned on dangers of “hasty localisation.”  Though the industry supports the plan to achieve electric mobility, it claims that the government should not rush for implementation. “The plan needs to be put in place with a practical approach without needlessly disrupting the automotive industry,” said Rajan Wadhera, president, Society of Indian Automobile Manufacturer. 

Wadhera’s statement comes against the backdrop of recent reports regarding a proposed plan for replacement of various categories of vehicles by EVs in certain time frames. According to the proposal, all three-wheelers and two-wheelers below 150cc will need to go electric by 2023 and 2025, respectively. “This seems to be impractical as well as untimely,” said Wadhera. 

This comes at a time when the world’s fastest-growing auto market is staring at a challenging task of leapfrogging to BS-VI emission norms, complying with many new safety norms, in the shortest time-frame ever attempted in the world. To meet the BS-VI norms, cumulatively, the industry has pumped in Rs 70,000-80,000 crore, said Wadhera. The recent slowdown in the market has only added to the challenges. Passenger vehicles have been in negative for the past three quarters and are unlikely to see respite unless monsoons are good and festive demand is strong.  

Some of them also pointed out the government’s subsidy scheme FAME II (faster adoption and manufacturing of electric vehicles) needs to be amended as it overlooks the basic issue of demand generation.

“The FAME II policy in its current form is not conducive and will not help in meeting the targets,” said an official at an auto company. The policy doesn’t support battery swap, which is particularly important for a three-wheeler, said another official during the close door meet. 

Instead of setting lofty targets that are expected to be achieved in shorter time, a long-term roadmap and a calibrated approach of converting a small percentage into EVs would have been more practical, said the official cited earlier. “It would have ensured that everyone is on-board,” he added. 

A NITI Aayog official said the consultative process had just begun and the think-tank, along with DHI, was working on the EV roadmap. On whether there are plans to amend FAME II, he said, if at all something is done, it will be done by DHI. 

NITI Aayog is not into formulating policies but giving inputs for policy formulation,” he said.  

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