By Jishaant

Abstract

The article explores India’s shift to electric vehicles (EVs) and its impact on fuel demand. It covers drivers like government incentives, environmental awareness, and tech progress. Benefits include less pollution, lower oil imports, and enhanced energy security. Concerns entail fuel industry job losses and stranded assets. EV adoption aligns with economic and strategic goals. The transition’s pace will balance technology promotion and minimizing existing industry impacts.

Current state of the electric vehicle market in India and the factors that have contributed to its growth

India, one of the biggest consumers of fossil fuels worldwide, is currently experiencing a huge transition to electric cars (EVs). With less than 1% of the market as of 2021, India’s electric vehicle (EV) market is still in its infancy. The Indian government has set an ambitious goal of 30% EV penetration by 2030, despite the market’s quick expansion. India’s fuel requirements have been re-evaluated in light of the EV revolution, and some analysts anticipate a sharp reduction in the demand for conventional fuels like petrol and diesel in the years to come. Additionally, EVs are a desirable replacement for conventional fossil-fuelled vehicles due to growing worries about air pollution and climate change.

To encourage the use of electric vehicles, the Indian government has implemented a number of programmes and incentives, such as tax incentives on the purchase of Electric vehicles. Incentives, financial aid, and assistance for infrastructure related to charging. Increasing fuel costs and environmental awareness of carbon emissions has led people to opt for greener options in recent years. Apart from this technological progress, electric vehicles are more reliable, efficient, and cost-effective because of the advancement in battery technology.

The EV boom in India is being led by two-wheelers, which make up the majority of the country’s automobile market. According to industry estimates, over 80% of the two-wheeler market in India is already electrified. This shift is being driven by the popularity of affordable electric scooters, which are increasingly becoming the vehicle of choice for urban commuters. Electric scooters have a lower running cost than traditional petrol or diesel scooters, and they also emit no tailpipe emissions, making them an attractive option for environmentally-conscious consumers.

The adoption of EVs in the four-wheeler segment is also picking up pace in India. Several automakers, both domestic and international, have launched electric cars in the country over the past few years. As more affordable electric cars enter the market, and as the charging infrastructure improves, it is expected that EV sales will continue to grow rapidly.

Policies and regulations implemented by the Indian government to support the growth of the electric vehicle market

·  Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME India) Scheme, This programme was introduced in 2015 with the goal of accelerating the use of electric and hybrid vehicles (EVs) in India by offering financial incentives for EV purchases, establishing a charging infrastructure, and encouraging the production of EVs and their parts in India.

·  Reduction in the Goods and Services Tax (GST), In order to make EVs more accessible to consumers, the GST on EVs was lowered in 2019 from 12% to 5%.

·  The National Electric Mobility Mission Plan (NEMMP) was introduced in 2013 with the goal of attaining national fuel security in India through the promotion of electric and hybrid vehicles. By 2020, 6-7 million hybrid and electric vehicle sales were the plan’s goal.  While India has been making progress in promoting electric mobility, including subsidies and incentives, the actual sales figures for electric and hybrid vehicles might not have reached the targeted numbers by 2020.

·  Phased Manufacturing Program (PMP): The PMP was launched in 2018 to promote local manufacturing of EV components such as lithium-ion cells, electric motors, and chargers. The program provides incentives to manufacturers who set up facilities to manufacture these components in India.

·  The Green Urban Transport Scheme (GUTS) was introduced in 2019 to promote the use of electric buses in urban areas. The program offers state transportation agencies financial support for the purchase of electric buses and the construction of charging stations.

·  State EV policies, To encourage the use of EVs in their respective states, a number of Indian states have also launched their own EV policies. By offering incentives to EV owners, establishing charging infrastructure, and promoting the use of EVs in the public transportation industry, for instance, the Delhi EV Policy 2020 seeks to encourage the adoption of EVs in Delhi.

The impact of these policies and regulations has been significant. According to the Society of Manufacturers of Electric Vehicles (SMEV), the sales of EVs in India increased by 20% in 2020 despite the COVID-19 pandemic. The number of EVs sold in India increased from 1.56 lakh units in 2019 to 1.87 lakh units in 2020. The FAME India scheme has been particularly effective in promoting the adoption of EVs in India, with more than 1.5 lakh EVs being sold under the scheme. The reduction in GST on EVs has also made EVs more affordable for consumers, which has helped to increase their adoption. However, there is still a long way to go before EVs become a mainstream mode of transport in India, and more needs to be done to promote their adoption.

How has the adoption of electric vehicles impacted India’s demand for traditional fossil fuels such as gasoline and diesel, and What are the potential implications for the country’s economy and energy security?

The demand for conventional fuels is significantly being impacted by the rise of EVs in India. India’s demand for petrol and diesel decreased by 10% and 17%, respectively, in 2020 compared to 2019. While the pandemic-induced economic slowdown may have contributed to some of this reduction, analysts think that the move towards electric vehicles (EVs) was a major factor in the decline in gasoline usage. Analysts believe that this trend will continue in the upcoming years and that India’s demand for petrol and diesel may peak in 2025.

The economy and energy security of India are affected in numerous ways by the reduction in demand for conventional fuels. India’s energy demands are largely met by imported crude oil, so any decline in fuel demand might have a big impact on the nation’s balance of payments, which could potentially be positively influenced by EV-related sales, including the export of vehicles themselves and related components like lithium batteries. This is particularly relevant given the government’s push to promote local production of these components.. On the other hand, India’s reliance on imported oil may decline in the long run as a result of the development of renewable energy sources and the widespread use of electric vehicles.

Significant potential is also presented by the switch to EVs for India’s auto industry. Indian businesses like Mahindra & Mahindra, Hero Electric, and Tata Motors are already setting the standard for the creation of electric vehicles. India has the chance to play a significant role in the EV market as the demand for EVs is anticipated to expand significantly in the upcoming years. This might help the nation’s manufacturing industry grow and generate new job possibilities. The use of EVs has various positive environmental effects as well. Compared to conventional vehicles, EVs produce no tailpipe emissions, which considerably reduces their contribution to air pollution. Given that some of the most polluted cities in the world are located in India, the move towards electric vehicles (EVs) might significantly improve air quality and public health.

Conclusion

The shift towards electric vehicles in India presents a significant opportunity for the country to address its energy security, economic, and environmental challenges. With ambitious targets set by the government, the country is on track to become a major player in the global EV market. The growth of EVs in India, particularly in the two-wheeler segment, has already led to a decline in the demand for traditional fuels, and this trend is expected to continue in the coming years. This shift presents significant opportunities for the auto industry, the manufacturing sector, and job creation, while also addressing environmental concerns and improving public health.

Author’s Bio

Jishaant is a Second Year at Jindal School of Environment and Sustainability, pursuing the course BA Hons and is deeply interested in environmental Economics.

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