India's electric vehicle journey so far: A story of nudges and trudges

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The concept of electric vehicles (EVs) has been around for a fairly long time, but it has drawn significant interest only in the past decade. While rising carbon footprint and other environmental impacts of the fuel-based vehicles have nudged policymakers the world over to look seriously at EVs, India’s efforts have so far yielded very little.

The country made its first concrete decision to incentivise EVs in 2010, when, under a Rs 95-crore scheme approved by the Ministry of New and Renewable Energy (MNRE), the government announced financial incentives for manufacturers of electric vehicles sold in India. 

Since then, the central government has taken several steps to get more Indians to adopt EVs, first under Prime Minister Manmohan Singh and then under Narendra Modi. Here is a timeline of events in the country’s EV journey so far:

November 2010: The Manmohan Singh-led United Progressive Alliance government announces a scheme with an outlay of Rs 95 crore to incentivize electric vehicles. The scheme envisages incentives of up to 20 per cent on ex-factory prices of the vehicles, subject to a cap. (Read more)

March 2012: The Ministry of New & Renewable Energy (MNRE) discontinues the Rs 95-crore subsidy scheme causing a 70 per cent drop in EV sales, according to manufacturers, besides temporary or permanent closure of several dealerships. (Read more)

2013: India unveils the 'National Electric Mobility Mission Plan (NEMMP) 2020' to make a major shift to electric vehicles and to address the issue of national energy security, vehicular pollution and growth of domestic manufacturing capabilities. The scheme is to offer subsidies and create supporting infrastructure for EVs.

2014: In two years of the March 2012 discontinuation of subsidy on EVs, electric two-wheeler sales crash to a mere 21,000 units a year (from 100,000 two years earlier). As many as 960 distributors of e-bikes — nearly half the total number of dealers in the country in 2011-12 — shut shop during the period. Worse, 26 of the 35 major electric two-wheeler makers during the peak sales period (between November 2010 and March 2012) are out of business due to poor demand. (Read more)

2015: In a move to boost electric vehicle sales in the country, the government earmarks Rs 1,000 crore for the NEMMP for the next two financial years. The amount is to be used for setting up of infrastructure, technology development, incentives and pilot projects. (Read more)

February 2015: In his Union Budget for 2015-16, then finance minister Arun Jaitley earmarks Rs 75 crore for faster adoption and manufacturing of electric vehicles (FAME). Electric vehicle makers call this a good beginning. (Read more)

December 2016: The Narendra Modi government’s November 8 decision to demonetise high-value currency in circulation at the time hits sales of electric vehicles, which are mostly bought in cash transactions in the absence of a financing facility. (Read more)

May 2017: Automakers urge the government to lower a proposed sales tax of 43 per cent on hybrid vehicles, as they fear the planned rate could make development of the technology unviable. (Read more)

July 2017: Phase I of the FAME scheme, which was initially for a period of two years from April 1, 2015, is extended for six months until September 30, 2017, with a slight modification. The benefits available to the Mild Hybrid technology under the scheme are discontinued with effect from April 1 2017. (Read more)

February 2018: When Transport Minister Nitin Gadkari had in 2017 made a statement showing intent for India to move to 100 per cent electric cars by 2030, the automobile industry had raised concerns over the execution of such a plan. Come 2018, the government dilutes its plans for electric passenger cars from 100 per cent to 30 per cent. (Read more)

March 2018: The second phase of the FAME scheme gets delayed by six months. The delay is due to the lack of consensus among stakeholders within the government on allocation of funds. (Read more)

February 2019: The Union Cabinet clears Rs 10,000-crore FAME II scheme for promoting electric vehicles. (Read more)

July 2019: The Goods and Services Tax (GST) council lowers rate on EVs from 12 per cent to 5 per cent and on electric chargers from 18 per cent to 5 per cent. The rate cut gives a clear signal that the government proposes to forge ahead with its target of reducing urban pollution and crude oil import bill. Both rate cuts considerably narrow the price differential between EVs and petrol and diesel vehicles. (Read more)

August 2019: The government softens its stance on the timeframe for transition to EVs. The Ministry of Heavy Industries, the Ministry of Road Transport and Highways, the power ministry, and the NITI Aayog — tasked with policymaking and implementation of the government’s e-mobility plan — agree to a “softer, pragmatic, phase-wise approach”. Under the revised plan, highly-polluted urban cities are to be targeted first. The change in stance follows automakers’ strong opposition of the government’s proposed plan to ban two-wheelers (below 150cc) and three-wheelers by 2023 and 2025, respectively, and replace them with battery-operated EVs. The industry had earlier said the move was not well-thought-out and would create unwanted disruptions in a market where infrastructure and ecosystem for EVs was non-existent.

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