In an effort to boost electric vehicle (EV) sales, the Indian government is expected to clarify that the 15-year 'End of Life' (EoL) regulation will not apply to EVs. This move aims to increase the adoption of electric buses, cars, and trucks in the country.
The decision was finalized during a high-level meeting led by Niti Aayog member Rajiv Gauba, addressing concerns about the slow progress of EV penetration in India. In 2024, EV penetration was only 7.6%, significantly lower than the target of 30% by 2030. While the adoption of two- and three-wheelers and buses has been relatively successful, four-wheelers and e-trucks have lagged.
Road transport secretary V Umashankar noted that most buses older than 15 years are privately owned. Niti Aayog CEO BVR Subrahmanyam suggested that exempting EVs from the 15-year EoL regulation could encourage sales. Umashankar also pointed out that mandating EV adoption is most effective in areas with a certain level of EV penetration and a developed ecosystem.
The government is considering shifting from incentives to mandates and disincentives to accelerate EV adoption. Strategies include saturating five cities with electric buses, para-transit vehicles, and urban freight vehicles. There was also a consensus on the need for rapid expansion of charging infrastructure, deployment of fast chargers, development of new battery technologies to reduce import dependence, and easier financing for e-buses and e-trucks.
Following the Niti Aayog meeting, the finance ministry engaged in discussions with banks to address their reluctance to finance EVs and the higher interest rates associated with EV loans. During the meeting, banks suggested standardizing batteries to alleviate their concerns.
The Indian government has set ambitious goals for EV adoption, aiming for 30% of new vehicle sales to be electric by 2030. This includes targets of 30% for private cars, 70% for commercial vehicles, 40% for buses, and 80% for two- and three-wheelers. To achieve these targets, the government has implemented various policies and incentives to promote EV adoption and strengthen the domestic manufacturing sector.
These policies include the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME India) Scheme, which was launched in 2015 to reduce reliance on fossil fuels and address vehicular emissions. Phase II of the scheme has an outlay of INR 10,000 Cr ($1.2 billion) for five years, starting April 1, 2019. The scheme allocates about 86% of the funds to create demand for EVs by supporting 7000 e-buses, 5 lakh e-3 wheelers, 55000 e-4 wheeler passenger cars (including strong hybrids), and 10 lakh e-2 wheelers.
The government has also reduced the Goods and Services Tax (GST) on EVs from 12% to 5% and on EV chargers and charging stations from 18% to 5%. Both commercial and private battery-operated vehicles are given green license plates and are exempt from permit requirements. Additionally, there are waivers on road tax for EVs, which helps to reduce their initial cost.
The government is also focused on enhancing domestic EV production. India's new EV policy requires a minimum investment of INR 41.5 billion (US$500 million) with no maximum limit. Manufacturers have three years to establish facilities and begin commercial production, with a target of achieving 25% domestic value addition (DVA) by the third year and 50% DVA by the fifth year.
The Production Linked Incentive (PLI) Scheme for the automotive sector, launched in September 2021 with a budget of US$3.1 billion, aims to boost domestic production of advanced automotive technology (AAT) products. Another PLI Scheme, targeting the National Program on Advanced Chemistry Cell (ACC) Battery Storage, was also launched in 2021 with a budget of US$2.1 billion over seven years to enhance ACC battery production capabilities in India.
