GS3 – Infrastructure
Context:
NITI Aayog’s recent publication, “Unlocking a $200 Billion Opportunity: Electric Vehicles in India”, presents a strategic vision for accelerating India’s transition to electric mobility and highlights the investment scope within the sector.
Key Insights from the Report
- Market Trends:
India’s electric vehicle (EV) sector is growing, yet hindered by structural inefficiencies. - Growth in Sales:
EV registrations surged from 50,000 in 2016 to 2.08 million in 2024, indicating rapid adoption. - Global Position:
EVs form only 7.6% of India’s vehicle market share—significantly lower than the global average of 16.5%. - Segmental Performance:
Two-wheelers and three-wheelers lead adoption due to affordability and compatibility with short-distance travel. - Travel Behaviour Alignment:
A high volume of trips in urban areas are under 10 km, matching current EV range capabilities. - Limitations in Freight Sector:
Battery weight and range constraints limit the practicality of EV trucks for long-haul transport. - Import Reliance:
India lacks a robust domestic battery innovation ecosystem, making it heavily dependent on imports.
Major Bottlenecks Identified
- High Initial Costs:
The steep upfront pricing of EVs hinders uptake, particularly in logistics and commercial segments. - Policy Fragmentation:
Disjointed regulatory processes and inconsistent state-level policies impede infrastructure development. - Charging Infrastructure Constraints:
Underutilisation and high GST rates render public charging stations financially unviable. - Consumer Hesitancy:
Concerns regarding safety, resale value, and insufficient awareness weaken consumer trust in EVs. - Battery Ecosystem Gaps:
Lack of indigenous innovation, dependence on imports, and poor battery recycling limit long-term sustainability.
Suggested Policy Measures
- Targeted Mandates:
Gradual policy mandates should be introduced for public transport, freight, and fleet-based segments. - Blended Finance Models:
Use of concessional capital to de-risk EV financing and promote private investment. - Battery Leasing Models:
Introduce battery leasing and performance-based digital monitoring to decouple battery costs from vehicle ownership. - Indigenous R&D Support:
Promote research into affordable and sustainable battery chemistries suited to Indian needs. - Behavioural Interventions:
National awareness campaigns and digital platforms should be leveraged to change perceptions and drive adoption.