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Unleashing the Potential: India's Electric Vehicle Industry Set to Reach $7.09 Bn by 2025 and Create

As the world grapples with climate change, India is taking proactive measures to curb its carbon footprint and transition to e-mobility. The country has set an ambitious target of having at least 30% of private vehicles as EVs by 2030, and the sector is poised for significant growth. In this article, we will delve into the current status and future aspirations of India's EV sector and explore how it can boost both the economy and the environment.



The Current Status of India's EV Sector

India's automotive industry is the fifth largest globally and is expected to rise to third place by 2030. The country is the world's largest producer of two and three-wheelers, the second-largest manufacturer of buses, and the biggest producer of vehicles like tractors. Currently, the automobile industry contributes 7.1% of India's Gross Domestic Product (GDP) and 49% of its manufacturing GDP, making it a crucial contributor to the nation's economy. As the world shifts towards sustainable mobility, numerous auto ancillaries and associated sectors are likely to grow along with the EV industry.


The EV market in India is estimated to be valued at $2 Bn by 2023 and $7.09 Bn by 2025. This growth will be aided by the government's incentives and policies, including the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) scheme, which provides subsidies for the purchase of EVs. The automotive industry accounts for 8% of all national exports and 40% of the total $31 Bn of global research and development spend.

As of August 2022, there were a total of 13,92,265 EVs on Indian roads. This number is set to increase significantly, with projections estimating 45-50 million EVs on the road by 2030. The sector currently employs around 37 million people, and by 2030, it aims to generate 50 million direct and indirect jobs.


The Future Aspirations of India's EV Sector

The future of India's EV sector looks promising, with an anticipated 10 million annual EV sales by 2030. This growth is expected to occur at a Compound Annual Growth Rate (CAGR) of 49% between 2022 and 2030. The government's target of 30% EVs by 2030 is only the beginning, and the sector is likely to witness further growth in the coming years.

The EV sector has already attracted significant Foreign Direct Investment (FDI) in equities, with equity inflows of $32.84 Bn between April 2000 and March 2022, accounting for 6% of all FDI during that period. This is a testament to the confidence global investors have in the potential of India's EV sector.


The Benefits of India's EV Sector

The shift towards EVs is not just a move towards a more sustainable future but also has several benefits for the Indian economy. The reduction in oil imports will help India save significant foreign exchange reserves, which can be utilized in other areas. Additionally, the growth of the EV sector will lead to the development of new technologies and industries, which will create more job opportunities and drive economic growth.

Moreover, the adoption of EVs will significantly reduce air pollution, which has been a growing concern in India. According to the World Health Organization (WHO), India is home to 14 out of the world's 20 most polluted cities. EVs produce zero tailpipe emissions, which will help in reducing air pollution and improving public health.


The Rise of Electric Vehicles in India

In recent years, the electric vehicle (EV) sector has been gaining traction in India, with various initiatives taken to promote the use of electric vehicles. The growth of the EV industry in India has been driven by the convergence of government policies, private investment, and a growing consumer base.


Investments by Conventional Players and Oil Companies

One of the driving forces behind the growth of the EV industry in India is the investment made by conventional automotive players and oil companies. Skoda recently announced its plan to produce EVs locally in India in 2021, and Indian Oil Corporation stated its plans to create 22,000 EV charging stations over three to five years. Such investments will not only encourage the growth of EVs in India but will also create new job opportunities.


Government Support and Programmes

The Indian government has been implementing several programs to encourage the growth of electric mobility, including 100 percent Foreign Direct Investment (FDI) through the automotive route in the EV space, incubator programs, shared facilities for prototyping and small-scale manufacturing, financial support through the Credit Guarantee Scheme for Start-ups (CGSS), tax breaks, and subsidies for consumers. These measures have been taken to encourage the growth of the EV industry in India and to make EVs more affordable for the average consumer.


Investment in EV Startups

Investment into EV startups in India has been on the rise, with funding reaching a record high of about $444 million in 2021, a 255 percent increase from the previous year. The five companies that received the most financing were Ola Electric, Blusmart, Simple Energy, Revolt, and Detel. India has over 500 startups in the EV ecosystem, with 63 percent of those startups solely dedicated to manufacturing. This trend is expected to continue, leading to further growth of the EV industry in India.


Production Linked Incentive (PLI) Scheme

The Indian government has taken several steps to promote the adoption of electric mobility in the country. One of the main initiatives is the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India (FAME India) scheme. Under Phase II of this scheme, which started on April 1, 2019, and runs until March 31, 2024, incentives are provided to buyers of electric vehicles in the form of an upfront reduction in the purchase price of electric vehicles. The scheme mainly focuses on supporting the electrification of public and shared transportation and aims to support through demand incentive 7090 e-Buses, 5 lakh e-3 Wheelers, 55000 e-4 Wheeler Passenger Cars, and 10 lakh e-2 Wheelers.


As of December 7, 2022, 7,45,713 electric vehicles have been supported under the FAME India scheme, and the total demand incentive amount provided is about Rs. 3,200 crores. Additionally, the Ministry of Heavy Industries has sanctioned 6315 e-buses to 65 cities/STUs/CTUs/State Govt. entities for intracity and intercity operations across 26 states/UT under the Scheme.


To address the challenges faced in the adoption of electric mobility in the country, the government has taken several measures, including increasing the demand incentive under Phase II of the FAME India Scheme, extending the scheme for a further period of two years, approving the Production Linked Incentive (PLI) Scheme for manufacturing of Advanced Chemistry Cell (ACC) in the country, reducing GST on electric vehicles and chargers/charging stations, providing green license plates and exemption from permit requirements for battery-operated vehicles, and advising states to waive road tax on EVs. These measures are expected to reduce the cost of electric vehicles and make them more accessible to consumers, thereby promoting the use of electric vehicles in the country.

The PLI scheme promotes the domestic manufacture of EV batteries and less reliance on imports. This will considerably lower the cost of EVs and provide the necessary infrastructure to support the EV sector.


Charging Stations and Infrastructure

India's total number of charging stations increased by 285 percent year over year in the financial year (FY) 2022, with strong government measures projected to accelerate the expansion to 4 lakh stations by FY 2026. The highway between Delhi and Chandigarh is the first in the nation to be made e-vehicle friendly by Bharat Heavy Electricals Limited (BHEL), which commissioned 20 solar-based EV chargers. This step will encourage the use of electric vehicles and facilitate long-distance travel.


Sales Projections

According to projections, the e-two-wheeler market in India is expected to hit 5 million units by 2025, accounting for 25-30 percent of the total market. E-three-wheelers are also expected to account for 30 percent of sales by 2025. Additionally, India's passenger vehicle industry is expected to show a growth of 16 percent in FY 2023, indicating a positive trend for the EV industry in India.


India's Electric Vehicle Industry: Driving Toward a Cleaner and Greener Future

As the world gears towards sustainable transportation, India is on its way to leading the charge in the electric vehicle (EV) sector. With the government and private sector's combined efforts, the country's EV market is expected to grow exponentially in the coming years. In this article, we'll discuss the current status of India's EV sector and its impending growth, along with the steps taken to boost it.


Investments in the EV sector: A sign of a promising future

The EV industry's importance and impending growth are already attracting investments in the sector. In 2021, it had around $6 Bn in investments, which is expected to increase to $20 Bn by 2030. The high investment shows the potential for growth and profitability in the sector.


Automotive Mission Plan (AMP) 2016–26: Driving India's EV Industry Forward

The Automotive Mission Plan (AMP) 2016–26 is the roadmap to boost the automotive industry, which encapsulates the goals shared by the Indian government and the automotive sector. The industry is expected to contribute more than 12% of the nation's GDP, of which 7.1% has been achieved until now. The plan aspires to constitute at least 40% of the manufacturing sector by the end of 2026, a significant boost for the EV industry.


Internal lithium-ion battery production: Lowering costs and reducing dependence

India's internal lithium-ion battery production plans could lower EVs' costs, reducing dependence and unsettling import duties. By doing so, the country will soon have a significant market in the EV industry. Moreover, with the government's support, the focus is on encouraging startups and businesses to start manufacturing EV batteries domestically, which will reduce the country's dependence on imports.


EVs: The key to India's auto industry's future

India's EVs are considered the key to the auto industry's future, given the current climate change and worries about it. EVs are set to take over as the industry's mainstay in the years to come. With government initiatives like the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) and Production Linked Incentive (PLI) scheme, the country is looking forward to reducing carbon dioxide emissions by one gigatonne by 2030.


Investments in the EV sector: Private equity and venture capitalists driving growth

Many private equity and venture capitalist investors have also invested in this sector, which grew from $181 Mn to $1.7 Bn. Several mutual funds like Mirae Asset Global Electric and Autonomous Vehicles exchange-traded fund (ETFs) Fund of Fund is an investment opportunity that invests in schemes like lithium and battery technology. It is clear that the investors see the potential for growth and profitability in the Indian EV industry.


India's auto industry's exponential growth: A sign of a brighter future

India's auto industry has had significant growth and is expected to continue experiencing exponential expansion. In terms of how the market is doing, the pandemic has sparked a demand for goods that help reduce pollution levels, and EVs are a remarkable way to do so. Furthermore, with the support of the government, the EV industry is expected to see a surge in sales in the years to come.


E-AMRIT portal: One-stop destination for all EV-related information

To streamline the EV industry and to ensure that the public has access to all the necessary information related to EVs, India launched the e-AMRIT portal in November 2021. The portal provides information about charging locations, investment opportunities, policies, and subsidies in the sector. It serves as a one-stop destination for all EV-related information for anyone who wants to get involved in the EV sector.


Opportunities for Individuals To Make an Entry Into EV Space

For individuals who want to get involved in the EV industry, there are various avenues to explore. With the government and private sector's push towards electric mobility, there are ample opportunities to create a career in this sector. From manufacturing EV parts to creating charging infrastructure, there is a range of roles that individuals can explore in the EV industry.


For those interested in manufacturing EV parts, there are opportunities to work with battery manufacturing companies. These companies require skilled technicians and engineers who can develop and improve battery technology. Additionally, companies that manufacture EV components such as motors, controllers, and power electronics are also in high demand.

Creating charging infrastructure is another area of the EV industry that is expected to experience significant growth. Companies that specialize in EV charging solutions are looking for individuals with expertise in electrical engineering, software development, and project management.


Individuals interested in research and development can also explore opportunities in EV innovation. This includes developing new battery technologies, exploring ways to optimize EV performance, and reducing production costs.


Moreover, as the demand for EVs continues to grow, there will also be a need for professionals in marketing, sales, and customer service roles. Companies that manufacture and sell EVs will need to market their products effectively and provide excellent customer service to stand out in a competitive market.


2023: A Turning Point for India's Electric Vehicle Sector

The Indian electric vehicle (EV) sector has seen both ups and downs in 2022. Despite the impending economic downturn, insiders and experts remain optimistic about the continued growth of the sector in 2023, which is expected to be a significant turning point in terms of policy, investment, and growth. The sector raised $884.7 million in funding, with Ola Electric and Ather Energy being the biggest recipients. The adoption of EVs in India is driven by affordability and sustainability, with lower operating and maintenance costs compared to traditional petrol-powered vehicles. The Indian EV market, valued at $3.21 billion in 2022, is expected to grow to $113.99 billion by 2029. In 2022, sales of two-wheelers and e-rickshaws doubled, while personal vehicles and e-buses rose 3X, compared with FY21.


2023-24 Union Budget

The 2023-24 Union Budget has allocated INR 35,000 crore towards crucial capital investments aimed at achieving energy transition and net-zero targets by 2070. This move is in line with the Indian government's target to achieve 30 percent electrification of the country's vehicle fleet by 2030. Finance Minister Nirmala Sitharaman has stated that the government will support Battery Energy Storage Systems with a capacity of 4,000 MWH through viability gap funding.


The government has launched several initiatives to support the growth of the electric vehicle industry. The Faster Adoption of Manufacturing of Electric Vehicles Scheme – II (FAME – II) and the Production Linked Incentive Scheme (PLI) are already in place. The Budget has allocated INR 51.72 billion (approximately $ 631 million) towards its FAME-II scheme to subsidize and promote the adoption of clean energy vehicles. This represents an 80 percent increase in budget allocation from previous years.


The reduced customs duty on Lithium-ion batteries used in electric vehicles and excise duty exemptions on natural gas and biogas could result in more foreign electric vehicles being imported to India. These incentives are expected to create demand for electric vehicles and drive the growth of the EV industry in India.


The government's emphasis on the production of electric vehicles and the adoption of hydrogen fuel, along with embracing changing technologies, will accelerate the shift towards clean energy in India. The increased budget allocation towards the energy transition is a welcome move that will facilitate the country's transition towards a greener future.


More clarity around regulations:

The EV sector expects new regulations in 2023, as well as clarity on existing ones. The Faster Adoption and Manufacturing of Electric Vehicles (FAME) program and the National Electric Mobility Mission Plan are two regulations that have been shaping the industry for the past couple of years. The industry is also eagerly awaiting clarification from the government regarding the standardization of swappable batteries. The government is expected to provide insight into its internal thought process on the matter. States have also been formulating their policies to boost EVs, not just in the private markets, but for public infrastructure as well. The Union Budget 2023 could include provisions for more incentives to promote domestic production of EVs and energy storage systems and reduce the existing import fee on parts used to make lithium-ion batteries.


Safety regulations to clean up the industry:

After a series of EV battery fires earlier this year, the government introduced a set of EV battery safety standards. Phase 1 of the AIS 156 standard for batteries and two and three-wheeler EVs came into effect on December 1, 2022. AIS 038 (Rev 2) is for battery safety for four-wheelers and above EVs. The deadline for phase 2 is March 31, and it is expected to have a detrimental impact on manufacturers who prioritized capitalizing on the EV trend in the country over ensuring the safety of their battery technology.


Year of infrastructure growth:

Several EV players have outlined plans to set up charging and swapping stations, including Ola Electric, Ather Energy, Sun Mobility, Honda, BluSmart, and Tata. Incumbent players like Shell and IOCL have also committed to partnering with firms to provide space for EV infrastructure. "2023 will be the year of EV infrastructure," says Chetan Maini of Sun Mobility. Gogoro, the Taiwanese battery-swapping giant, has expanded into India, flagging off a race to gain more footprint in terms of infrastructure. 2023 is expected to see more stations being set up, along with deals between energy incumbents and startups for more charging and swapping facilities.


Consolidation of the two-wheeler EV market:

Homegrown startups have consolidated their market share and taken over from leading manufacturers, with Ola Electric supplanting Okinawa and Hero Electric, which had been ruling the roost for the last two years. Commercial EVs continued to be dominated by legacy companies such as Mahindra Electric Mobility, Piaggio Vehicles India, Tata Electric, and Euler Motors.


Concluding Remarks


India's EV Industry Set for Significant Growth by 2030

India has set an ambitious goal of having at least 30% of private vehicles as EVs by 2030, which is a significant step towards a more sustainable future. The EV sector in India is poised for significant growth, with an estimated 45-50 million EVs on the road by 2030, generating millions of direct and indirect jobs. The government's incentives and policies, along with significant foreign investment, have made India an attractive destination for the EV industry.


Benefits of EV Adoption for the Indian Economy

The shift towards EVs has several benefits for the Indian economy, including reducing oil imports, developing new technologies and industries, and creating job opportunities. Most importantly, the adoption of EVs will significantly reduce air pollution, which is a growing concern in India, and improve public health. With the right policies and investments, India's EV sector has the potential to drive economic growth while also contributing to a sustainable future for generations to come.


Resilience and Potential for Growth in the Indian EV Sector

The Indian EV sector has shown resilience and potential for growth despite facing challenges in 2022. The sector's optimism for continued growth in 2023 is driven by policy shifts, cost-effective battery production, and infrastructure growth. The adoption of EVs in India is driven by affordability and sustainability, with lower operating and maintenance costs compared to traditional petrol-powered vehicles. The industry is eagerly awaiting clarity on existing regulations, and the government is expected to provide more incentives to promote the domestic production of EVs and energy storage systems. Safety regulations are being implemented to ensure the safety of battery technology, and 2023 is expected to be the year of EV infrastructure growth. The consolidation of the two-wheeler EV market is also taking place, with homegrown startups taking over from leading manufacturers. Overall, the Indian EV sector is poised for significant growth in the coming years, and stakeholders are working towards making EVs accessible, affordable, and sustainable for the masses.


Factors Driving the EV Industry in India

The electric vehicle industry in India has been gaining momentum over the years, driven by a combination of government support, private investment, and a growing consumer base. With the investments being made by conventional automotive players and oil companies, the implementation of government programs and initiatives, the rise in funding for EV startups, and the Production Linked Incentive scheme, the future of the EV industry in India looks bright. The growth of the charging infrastructure and sales projections for e-two and e-three wheelers further support this positive trend. As the industry continues to expand, it will not only provide more affordable and sustainable transportation options for consumers but also create new job opportunities and contribute to the overall growth of the Indian economy.


Government Initiatives and Policies Driving the Growth of the Indian EV Sector

The Automotive Mission Plan, internal lithium-ion battery production, and government initiatives such as FAME and PLI scheme all contribute to the industry's bright future. Additionally, the launch of the e-AMRIT portal and ample opportunities for individuals to enter the EV space highlight the industry's potential for growth and the significant impact it can have on India's economy and environment. With India's commitment to sustainable transportation, the country is set to become a leader in the global EV market.

The Ministry of Heavy Industries in India has formulated three schemes to promote the use of electric vehicles in the country and to make their manufacturing cost-effective. The first scheme is the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India (FAME India), which was notified in Phase II for a total budgetary support of Rs. 10,000 crore. Under this scheme, incentives are provided to buyers of electric vehicles in the form of an upfront reduction in the purchase price of electric vehicles, which is linked to battery capacity. The second scheme is the Production Linked Incentive (PLI) Scheme for the Automotive Sector, which was approved on 15th September 2021, with a budgetary outlay of Rs. 25,938 crores. Electric vehicles are covered under this PLI scheme. The third scheme is the PLI Scheme for Advanced Chemistry Cell (ACC), which was approved on 12th May 2021, with a budgetary outlay of Rs. 18,100 crore. The scheme aims to establish a competitive ACC battery manufacturing setup in the country for 50 GWh, and it also covers 5GWh of niche ACC technologies. These schemes are expected to promote the use of electric vehicles in the country and make their manufacturing cost-effective, which would help in reducing pollution and dependence on fossil fuels.


The Indian government has formulated several schemes to promote the use of electric vehicles in the country and make their manufacturing cost-effective. The main initiative is the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India (FAME India) scheme, which provides incentives to buyers of electric vehicles. The Production Linked Incentive (PLI) Scheme for the Automotive Sector and the PLI Scheme for Advanced Chemistry Cell (ACC) are also aimed at making electric vehicles more accessible and reducing pollution and dependence on fossil fuels. The government has also taken several measures to address the challenges faced in the adoption of electric mobility, including increasing the demand incentive, reducing GST, providing green license plates and exemption from permit requirements, and advising states to waive road tax on EVs. These efforts are expected to make electric vehicles more affordable and promote their use in the country.


Career Opportunities in the Indian EV Industry

India's EV industry is poised for tremendous growth, and the government's push toward electric mobility will continue to create ample opportunities for individuals who want to get involved in this sector. From manufacturing EV parts to creating charging infrastructure and innovation, there are diverse roles for people with various skill sets and interests. By exploring the different avenues available, individuals can create a fulfilling career in this rapidly growing industry.



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