A strict approach against the proliferation of electric vehicles

- Measures like withholding subsidy are likely to affect electric vehicle production in the country

- India ranks 11th out of fifteen countries in terms of readiness to move strongly towards electric vehicles

As compared to 2021, the sales of electric vehicles in the country has tripled to cross the ten lakh mark and the Indian electric vehicle industry is on the verge of rapid growth in the coming years, the measures taken by the government against the electric vehicle industry may create disappointment in the industry.

After the fire incidents, the country's government has tightened the safety standards in electric vehicles, but as the manufacturers have been given very little time to implement it, there is a risk that the production of electric vehicles, especially two-wheelers, will be affected in the coming days, not only that, the investments coming in the electric vehicle sector will also slow down. The possibility is there. The Ministry of Road Transport has tightened the testing and certification standards by changing the norms for safety. Apart from safety norms, the government has instructed electric vehicle manufacturers to use locally manufactured components. It was also recently revealed that the government has stopped providing subsidies to producers who do not comply with this directive.

It was recently alleged that the Ministry of Heavy Industries has withheld Rs 1,100 crore subsidy to promote electric vehicle production. The subsidy was said to have been stopped following complaints that electric vehicle manufacturers were not enforcing the standard of using local goods. In a letter to the Centre, the Society of Manufacturers of Electric Vehicles asked the government to tone down the issue. The move to withhold subsidies to major manufacturers of electric two-wheelers could create an unprecedented situation. The letter also claimed that electric vehicle manufacturers will suffer due to lack of subsidies.

To increase the penetration of electric vehicles in the country, the government has launched the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme under which subsidies are provided. FAME aims to promote sales of electric vehicles. Under this scheme, the subsidy amount is credited to the manufacturer's account after the sale of the electric vehicle. In October 2022, the Center had issued notices to some electric vehicle manufacturers and sought to know whether the components used in their vehicles were manufactured domestically. However, electric vehicle manufacturers started raising their voices against this fatwa saying that it was not possible to comply with the localization norms fixed under FAME in the short term.

Considering the growing demand for electric vehicles in the country, the electric vehicle (EV) charging station business will require an investment of approximately Rs 1.05 lakh crore in the next decade and investors are also coming forward for this. Demand for electric vehicles is also expected to grow at a CAGR of 39 percent by 2032. On the other hand, 80 percent of the country's total crude oil requirement is met through imports. In such a situation, the more electric vehicles spread in the country, the sooner it will help prevent massive crude oil imports and outflows of forex reserves. Apart from relief from high import bill due to electric vehicles, it will help in reducing the pollution spread by petrol-diesel vehicles.

In FY 2022, 2.50 percent of the total sales of new vehicles in the country were electric vehicles. In FY2021, these sales were less than one percent. There is no doubt that special schemes are being announced by the government to speed up the spread of electric vehicles and for this reason companies are eager to make new investments in the electric vehicle sector. The subsidies and incentive schemes being provided may be the reason behind the increase in the production of electric vehicles so far. India ranks 11th out of fifteen countries in terms of readiness to move strongly towards electric vehicles. Thus, it can be said that we still have a lot to prepare for the spread of electric vehicles.

The recent high crude oil prices have upset the fiscal calculations of many governments around the world, including India. If such calculations are to be prevented in the future, it is necessary to reduce the consumption of petrol-diesel or even the dependence on it. This situation can be seen only when the government is liberal in its policy regarding electric vehicles.

It was reported that more than 18 lakh electric vehicles have been registered in the country. In a big country like India, this number can be said to be very small. Entrepreneurs in the emerging electric vehicle sector in the country will come forward to invest only when they are assured of sufficient cooperation from the government. It remains the responsibility of the government to ensure that investors in the electric vehicle sector in the country are not discouraged by controversies like the recent controversy regarding subsidy.