Indian Economy and issues relating to planning, mobilization, of resources
Government policies and interventions for development in various sectors
Reviving the automobile sector
Context: In the post-Covid world, electric vehicles will be key not only to breathing new life into the automotive sector but also to decarbonising it
Did You Know?
By 2050, every second car produced globally would be electrically powered.
Research by Deloitte Global Automotive shows that over 50% of the consumers are still unclear about the safety of the battery and the availability of adequate charging stations leading to slower adoption of E-vehicles
Problems of Indian Automobile Sector
In pre-COVID times
Declining consumer demand
Difficulty in transitioning into BS-VI technology
Extinguishing inventories of left-over BS-IV vehicles
Credit crunch in the NBFC sector
In Post-COVID times
Challenges of dealing with a completely new environment – rising protectionism and decline in international trade
Decreased purchasing power of consumers
Disruption in manufacturing capabilities
Issues with inventory management and labour shortages
Need for emergency response mechanisms in the backdrop of disrupted global supply chain
India and E-Vehicles
Strong growth: The EV industry in India managed to post a decent 20% increase in sales in FY20 compared to FY19
Policy Push by government for e-vehicles: The GST council reduced the rates from 12% to 5% for vehicles, and from 18% to 5% for vehicle chargers.
Push by State governments to adopt e-vehicles For ex: Kerala government has instructed all its departments to purchase only e-vehicles from the next financial year.
Dedicated schemes like FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) have incentivised local manufacturing and the growth of domestic technology.
Electric Vehicles – Prospects in Post-COVID times
Personal mobility is going to pick up again post-Covid, as people would avoid mass transport thus giving boost to e-vehicles
Driver of growth: In Post-COVID times, fastest growth for automotive sector would come from the e-rickshaws segment that plugs last-mile connectivity.
India’s Demographic advantage: Surveys point that younger consumers, particularly females, are more willing to invest in EVs than older generation.
Environmental friendly: Increased environmental awareness among public, especially after COVID crisis, could lead to increased adoption for e-vehicles
Way Ahead
There should be a further policy push for a visible shift towards increased EV adoption
Banks should devise innovative credit schemes to push for such a shift.
The government should focus on augmenting the charging infrastructure
Governments should also have in place a scrappage policy that drives new-vehicle sale.
Existing automobile companies should make e-vehicles more affordable and maintenance easier, with quick availability of parts (no dependence on import)
Conclusion
EVs are the only way to decarbonise the transport sector and achieve India’s ambitious target of complete green mobility by 2030.
Connecting the dots:
EV Batteries – dependence on China for supply of Lithium
Challenges with regard to air transport in Post-COVID times
