World EV Day: Will EVs See The Light Of Day In India?
For a long time now, electric vehicles (EV) have been considered as the long-term solution for mobility across the global market including in Indian market. The transition to battery-powered mobility has been a point of contention for the global automotive industry but something which seems inevitable. The Government of India for a decade now, has been a strong advocate of this transition and at the centre of this movement is Union Minister of Transport and Highways— Nitin Gadkari.
Gadkari has been very vocal about the Indian market not only adopting EVs and Hydrogen based fuel at a mass level but also encouraging OEMs in India to locally manufacture EVs in the country, reducing dependency on foreign markets for imports to meet the demand. For this, a larger demand needed to be created so that buyers are lured towards cleaner battery-powered vehicles over traditional petrol and diesel vehicles.
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Through the implementation of the Faster Adoption of Manufacturing of Electric Vehicles (FAME) scheme, this transformative journey spurred significantly. Launched in 2015, FAME aimed to promote the adoption of EVs in India through incentives and subsidies. While FAME 1 provided initial push, it was FAME 2.0, introduced in 2019, that supercharged EV sales across various segments.
However, things took a significant turn earlier this year when several benefits provided to OEMs and buyers under the FAME 2.0 scheme were either scrapped completely or reduced. A couple of days ago, the Indian government’s subsidies are no longer necessary for electric vehicle (EV) manufacturers, thanks to the rapidly growing demand for EVs and CNG powered vehicles. As a result, EV manufacturers in India have reached a point of sustainability, enabling them to thrive without relying on government subsidies.
Impact of FAME 2.0 subsidies
FAME 2.0 significantly enhanced incentives for electric two-wheelers, three-wheelers, and four-wheelers. This resulted in a remarkable surge in EV sales, particularly in the two-wheeler segment. Companies like Ola Electric, Ather Energy, and Bajaj Auto capitalised on the scheme, launching innovative and affordable electric scooters.
However, the withdrawal of FAME 2.0 incentives in March 2024 created worry for Indian EV market. While the government emphasised the need for industry maturity and self-sufficiency, the sudden withdrawal caught many stakeholders off guard. The immediate impact was a noticeable decline in EV sales across segments.
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So the burning question is whether or can EVs survive without subsidies in India for the longer run? At this point, it is difficult to predict anything since the market share for EVs in India is less and there is a long way to go before large population transition from internal combustion engines (ICE) vehicles to battery-powered vehicles. However, the following two aspects should be noted before drawing any conclusions.
On World EV Day, everyone recognizes the transformative role of auto component industry is playing in shaping India’s journey toward sustainable mobility. The transition to electric vehicles is more than just a technological shift—it is a redefinition of how we move, with a deep commitment to the environment.
