India’s Automobile Industry: A Growth Story

India’s automobile industry is one of the largest and most dynamic sectors in the country, contributing significantly to the economy, employment, and innovation. The industry has witnessed a remarkable growth trajectory over the past decade, driven by various factors such as rising income levels, urbanisation, infrastructure development, policy support, and consumer preferences.

According to the latest data from the Society of Indian Automobile Manufacturers (SIAM), the industry produced a total of 2,59,31,867 vehicles, including passenger vehicles, commercial vehicles, three wheelers, two wheelers, and quadricycles, in the financial year 2022-23, as against 2,30,40,066 units in the previous year. This represents a growth of 12.5% year-on-year, despite the challenges posed by the COVID-19 pandemic and the global semiconductor shortage.

The domestic sales of the industry also increased by 16.9% year-on-year, from 1,74,21,482 units in 2021-22 to 2,03,63,456 units in 2022-23. The passenger vehicle segment registered a growth of 26.8%, from 30,69,523 units to 38,90,114 units, driven by the demand for utility vehicles, which grew by 34.1%, from 14,89,219 units to 20,03,718 units. The commercial vehicle segment also witnessed a growth of 34.3%, from 7,16,566 units to 9,62,468 units, reflecting the recovery of the economy and the transport sector. The three wheeler segment grew by 87.1%, from 2,61,385 units to 4,88,768 units, while the two wheeler segment grew by 16.9%, from 1,35,70,008 units to 1,58,62,087 units.

The exports of the industry, however, declined by 16.6% year-on-year, from 55,13,033 units in 2021-22 to 45,96,207 units in 2022-23. This was mainly due to the lower demand from the key export markets, such as Africa, Latin America, and Southeast Asia, which were severely affected by the pandemic and the currency fluctuations. The passenger vehicle exports decreased by 2.6%, from 5,77,875 units to 6,62,891 units, while the commercial vehicle exports decreased by 14.8%, from 92,297 units to 78,645 units. The three wheeler exports decreased by 26.8%, from 4,99,730 units to 3,65,549 units, while the two wheeler exports decreased by 17.8%, from 44,43,131 units to 36,52,122 units.

The industry is expected to continue its growth momentum in the coming years, as it adapts to the changing market dynamics and consumer preferences. The industry is also undergoing a transformation towards cleaner and smarter mobility, with the adoption of electric vehicles, hybrid vehicles, connected vehicles, and shared mobility. The government has also announced various initiatives and incentives to support the industry, such as the Production Linked Incentive (PLI) scheme, the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, the National Automotive Scrappage Policy, and the Vehicle Scrappage Policy.

The automobile industry is a vital part of India’s economic and social development, and has the potential to become a global leader in the post-pandemic world. The industry has shown its resilience and innovation in the face of adversity, and has emerged stronger and more competitive. The industry is poised to create more value and opportunities for the nation, the stakeholders, and the customers.

How India can boost its electric vehicle charging infrastructure

India has an ambitious vision of becoming a global leader in the electric vehicle (EV) revolution. However, one of the major challenges that the country faces is the lack of a robust EV charging infrastructure. In this article, we will explore how India can overcome this hurdle and create a sustainable and efficient EV ecosystem.

India is one of the emerging markets for electric vehicles (EVs), with a potential to reach 30% of new vehicle sales by 2030. However, one of the key challenges for the adoption of EVs is the lack of adequate and accessible charging infrastructure. To address this challenge, the government and the private sector are working together to develop a network of EV charging stations across the country, leveraging various technologies, business models, and partnerships .

Some of the initiatives and innovations that are shaping the future of India’s EV charging infrastructure are:

• The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) II scheme, which provides subsidies and incentives for setting up 2,700 charging stations in 100 cities by 2023.

• The National Electric Mobility Mission Plan (NEMMP) 2020, which aims to create a policy framework and roadmap for electrifying the transport sector and promoting the development of charging infrastructure.

• The Bharat EV Charger Standards, which specify the technical and performance requirements for different types of EV chargers, such as AC001, DC001, and DC002, to ensure interoperability and compatibility.

• The One Nation One Charger initiative, which proposes to create a common platform and protocol for all EV charging service providers, enabling seamless access and payment for EV users.

• The Plug and Play model, which allows EV users to charge their vehicles at any public or private charging station, without the need for a subscription or membership.

• The Battery Swapping model, which enables EV users to exchange their depleted batteries for fully charged ones at designated stations, reducing the charging time and cost.

• The Smart Charging model, which leverages artificial intelligence, cloud computing, and blockchain to optimize the charging process, reduce the grid load, and enable peer-to-peer energy trading.

• The Solar Charging model, which harnesses renewable energy sources, such as solar panels, to power the EV charging stations, reducing the carbon footprint and enhancing the energy security.

India’s EV charging infrastructure is expected to grow rapidly in the coming years, as the demand for EVs increases and the technology and innovation evolve. However, there are also some challenges and barriers, such as the high upfront cost, the lack of awareness and trust, the regulatory uncertainty, and the coordination among multiple stakeholders. The industry will need to overcome these challenges and capitalize on the opportunities to create a robust and sustainable EV charging ecosystem in India.

Why public EV charging infrastructure may not be necessary

A common misconception is that India needs a large-scale public EV charging infrastructure to support its EV adoption. However, this may not be the case for most EV segments, such as two-wheelers, private four-wheelers, and intra-city public transport. These segments can be charged at home, office, or depot locations, where they are parked for long periods of time. In fact, according to the International Energy Agency (IEA), almost 90% of the chargers worldwide are private light duty vehicle slow chargers, which are installed in homes, apartment buildings, and workplaces.

Therefore, instead of focusing on building public EV charging stations, India should create augmentation plans for setting up private EV chargers in these locations. This would not only reduce the cost and complexity of the EV charging infrastructure, but also increase the convenience and accessibility of EV charging for the consumers.

How various stakeholders can facilitate the EV charging infrastructure and ecosystem

The development of the EV charging infrastructure and ecosystem in India requires the collaboration and coordination of various stakeholders, such as the government, the power sector, the EV industry, and the consumers. Here are some of the roles and responsibilities of these stakeholders:

• The government should provide policy support and incentives for the installation of private EV chargers, such as subsidies, tax benefits, and regulatory reforms. The government should also create standards and guidelines for the EV charging infrastructure, such as interoperability, safety, and quality. Moreover, the government should promote awareness and education among the consumers about the benefits and usage of EVs and EV chargers.

• The power sector should ensure the availability and reliability of the electricity supply for the EV charging infrastructure. The power sector should also adopt smart grid technologies and demand response mechanisms to manage the load and peak demand of the EV charging. Furthermore, the power sector should explore the potential of renewable energy sources and battery storage systems to power the EV charging infrastructure.

• The EV industry should innovate and design EVs and EV chargers that are affordable, efficient, and durable. The EV industry should also collaborate with the power sector and the government to create a seamless and integrated EV charging network. Additionally, the EV industry should offer value-added services and solutions to the consumers, such as mobile apps, payment options, and loyalty programs.

• The consumers should adopt EVs and EV chargers as a green and economical alternative to conventional vehicles and fuels. The consumers should also participate in the EV charging ecosystem, such as sharing their EV chargers with other users, providing feedback and suggestions, and supporting the EV community.

Conclusion

India has a huge potential to become a frontrunner in the EV revolution. However, to realize this potential, India needs to develop a robust EV charging infrastructure and ecosystem that can cater to the needs and preferences of the EV segments and stakeholders. By focusing on the private EV charging infrastructure and fostering the collaboration and coordination of the various stakeholders, India can create a sustainable and efficient EV ecosystem that can benefit the environment, the economy, and the society.

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How India can leverage priority sector lending to finance its electric vehicle transition

India has a huge potential to become a global leader in the electric vehicle (EV) revolution. However, one of the major barriers that the country faces is the lack of adequate financing for EVs and their related infrastructure. In this article, we will explore how India can use its priority sector lending (PSL) guidelines to mobilize capital for its EV transition.

What is priority sector lending and why is it important for EVs?

PSL is a regulatory mechanism that requires scheduled banks to allocate a certain percentage of their total credit to sectors of national priority, such as agriculture, micro, small and medium enterprises (MSMEs), education, housing, and social infrastructure. The Reserve Bank of India (RBI) sets the PSL targets and sub-targets for different categories of banks and monitors their compliance.

PSL can play a vital role in supporting the financing of EVs and their related infrastructure, such as charging stations and batteries. EVs are currently not included in the PSL guidelines, which means that banks and non-banking finance companies (NBFCs) have no incentive to lend for EVs. As a result, EV buyers face high interest rates, short tenures, and low loan-to-value ratios, which make EVs less affordable and attractive compared to conventional vehicles.

By including EVs as a priority sector, the RBI can create a favorable environment for EV financing and encourage banks and NBFCs to offer competitive and customized loan products for EVs. This can help overcome the perceived and real risks associated with EVs, such as high upfront costs, low resale value, uncertain battery life, and limited charging infrastructure. Moreover, PSL can also help address the credit gaps and needs of different EV segments and use cases, such as two-wheelers, three-wheelers, public transport, fleet operators, and MSMEs.

How can EVs be included in the PSL guidelines?

NITI Aayog, the premier policy think tank of the Government of India, is working with the RBI to operationalize the inclusion of EVs as a priority sector. However, there are several considerations and recommendations that need to be taken into account to design the PSL guidelines for EVs. These include:

• Defining the scope and eligibility criteria of EVs and their related infrastructure for PSL. This should be based on the type, size, and purpose of the EVs, as well as the technology, capacity, and location of the charging stations and batteries.

• Setting the PSL targets and sub-targets for EVs and their related infrastructure for different categories of banks and NBFCs. This should be based on the current and projected demand and supply of EV financing, as well as the existing and potential market share and penetration of different lenders.

• Providing incentives and disincentives for banks and NBFCs to achieve the PSL targets and sub-targets for EVs and their related infrastructure. This could include interest rate subsidies, tax benefits, risk guarantees, penalties, and ratings.

• Creating an enabling ecosystem and infrastructure for EV financing. This could include establishing a dedicated EV financing platform, developing standardized loan products and contracts, creating a robust data and information system, and enhancing consumer awareness and education.

Conclusion

India has a huge opportunity to accelerate its EV transition and achieve its climate and development goals. However, to realize this opportunity, India needs to mobilize adequate and affordable financing for EVs and their related infrastructure. By including EVs as a priority sector, India can leverage its PSL mechanism to mainstream EV financing and create a win-win situation for the lenders, borrowers, and the society.

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How India is Mobilising Electric Vehicle Financing

India is one of the fastest-growing markets for electric vehicles (EVs) in the world. The country has set an ambitious target of achieving 30% electric mobility by 2030, as part of its commitment to reduce greenhouse gas emissions and improve air quality. However, to realise this vision, India needs to overcome a major challenge: mobilising adequate and affordable finance for EVs and related infrastructure.

According to a new report by NITI Aayog and Rocky Mountain Institute (RMI) India, titled ‘Mobilising Electric Vehicle Financing in India’, the transition to electric mobility will require a cumulative capital investment of USD 266 billion (Rs 19.7 lakh crore) in EVs, charging infrastructure, and batteries over the next decade. This is equivalent to about 3.6% of India’s GDP in 2020.

The report also estimates that the financing of EVs in India will be worth USD 50 billion (Rs 3.7 lakh crore) by 2030, which is about 80% of the current size of India’s retail vehicle finance industry, worth USD 60 billion (Rs 4.5 lakh crore) today. This presents a huge opportunity for financial institutions, such as banks and non-banking financial companies (NBFCs), to tap into the emerging EV market and offer innovative products and services to customers.

However, the report also identifies several barriers that hinder the flow of finance to EVs in India, such as high interest rates, low loan-to-value ratios, high insurance premiums, lack of product guarantees, and limited awareness among consumers and financiers. To address these barriers, the report proposes a toolkit of 10 solutions that can help catalyse EV financing in India. These include:

• Priority-sector lending and interest-rate subvention for EVs, to provide low-cost and long-term loans to EV buyers and manufacturers.

• Product guarantees and warranties for EVs and batteries, to reduce the perceived risk and uncertainty of EV performance and resale value.

• Leasing and pay-as-you-go models, to enable customers to access EVs without paying a high upfront cost and to provide flexibility and convenience.

• Fleet and aggregator electrification targets, to create demand and scale for EVs in the commercial segment, which can also benefit from lower operating costs and higher utilisation rates.

• Digital lending platforms, to leverage data and analytics to offer customised and hassle-free loans to EV customers, especially in the rural and semi-urban areas.

• Securitisation and refinancing mechanisms, to enhance the liquidity and availability of funds for EV finance, by pooling and selling EV loans to institutional investors.

• Dedicated debt funds and credit lines, to provide long-term and low-cost debt capital for EV manufacturers and service providers, especially start-ups and MSMEs.

• Blended finance instruments, to mobilise public and private capital for EV projects, by using concessional funds to leverage commercial funds and mitigate risks.

• Open data repository and information platform, to provide reliable and transparent data on EV performance, costs, and benefits, to enable informed decision-making by customers and financiers.

• Capacity building and awareness programs, to educate and sensitise customers, financiers, dealers, and manufacturers about the advantages and opportunities of EVs and EV finance.

The report also showcases some of the best practices and case studies of EV financing from India and other countries, such as China, Norway, and the US, which can serve as examples and inspiration for the Indian market. The report emphasises that the successful implementation of these solutions will require collaboration and coordination among various stakeholders, such as the government, industry, civil society, and academia.

The report is a timely and valuable contribution to the discourse on electric mobility in India, as it highlights the role of finance as a key enabler and driver of the EV transition. By providing a comprehensive and actionable roadmap for EV financing in India, the report can help accelerate the adoption of EVs and unlock the multiple benefits of electric mobility for the economy, society, and environment. 

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How India is Accelerating Electric Vehicle Adoption

India is one of the most promising markets for electric vehicles (EVs) in the world, with a potential to become a global leader in clean and sustainable mobility. The country has a strong motivation to adopt EVs, as it faces multiple challenges such as rising oil imports, increasing air pollution, and growing greenhouse gas emissions. The government has also set an ambitious target of achieving 30% electric mobility by 2030, as part of its commitment to the Paris Agreement on climate change.

However, to realise this vision, India needs to overcome several barriers that hinder the adoption of EVs, such as high upfront costs, lack of charging infrastructure, limited product availability, and low consumer awareness. To address these barriers, the government, the industry, and the civil society have been taking various initiatives and measures to create a conducive ecosystem for EVs in India.

According to a report by KPMG in India, titled ‘Electric Vehicle Mobility: Towards a New Normal’, the following are some of the key drivers and enablers of EV adoption in India:

• Policy support: The government has launched several policies and schemes to promote EVs, such as the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, which provides subsidies and incentives for EV manufacturers and buyers; the National Electric Mobility Mission Plan (NEMMP) 2020, which outlines the roadmap and targets for EV deployment; and the National Mission on Transformative Mobility and Battery Storage, which aims to create a local manufacturing ecosystem for EVs and batteries.

• Technology innovation: The industry has been investing in research and development to improve the performance, efficiency, and affordability of EVs and batteries. The industry has also been exploring new technologies and business models, such as battery swapping, vehicle-to-grid, and smart charging, to enhance the convenience and value proposition of EVs.

• Consumer preference: The consumers have been showing an increasing interest and willingness to adopt EVs, especially in the urban areas, where the awareness and availability of EVs are higher. The consumers are also becoming more conscious of the environmental and social benefits of EVs, as well as the lower operating and maintenance costs compared to conventional vehicles.

• Social impact: The civil society has been playing a vital role in creating awareness and advocacy for EVs, as well as providing feedback and inputs to the policy makers and the industry. The civil society has also been supporting the adoption of EVs among the underserved and marginalised segments of the society, such as women, rural communities, and informal workers, through various initiatives and programs.

The report also highlights some of the best practices and case studies of EV adoption from India and other countries, such as China, Norway, and the US, which can serve as examples and inspiration for the Indian market. The report emphasises that the successful adoption of EVs in India will require a collaborative and holistic approach, involving all the stakeholders, such as the government, the industry, the civil society, and the consumers.

The report is a comprehensive and insightful analysis of the EV market and ecosystem in India, as it captures the current trends, challenges, and opportunities for EV adoption. By providing a strategic and actionable framework for EV adoption in India, the report can help accelerate the transition to electric mobility and unlock the multiple benefits of EVs for the economy, society, and environment. 

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How India is Creating Opportunities for Electric Vehicle Charging

India is one of the most promising markets for electric vehicles (EVs) in the world, with a potential to become a global leader in clean and sustainable mobility. The country has a strong motivation to adopt EVs, as it faces multiple challenges such as rising oil imports, increasing air pollution, and growing greenhouse gas emissions. The government has also set an ambitious target of achieving 30% electric mobility by 2030, as part of its commitment to the Paris Agreement on climate change.

However, to realise this vision, India needs to create a conducive ecosystem for EVs, which includes the availability of charging infrastructure. Charging infrastructure is a critical facilitator of EV adoption, as it influences the range, convenience, and cost of EVs. According to a report by KPMG in India, titled ‘Electric vehicle charging - the next big opportunity’, India is forecasted to have 102 million EVs on its roads by 2030, which will require 2.9 million public charging stations. This represents a huge opportunity for various players, such as charge point operators, oil marketing companies, utilities, and EV fleet operators, to enter and expand the EV charging market in India.

The report also identifies some of the key drivers and enablers of EV charging in India, such as:

• Policy support: The government has launched several policies and schemes to promote EVs and charging infrastructure, such as the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, the National Electric Mobility Mission Plan (NEMMP) 2020, the National Mission on Transformative Mobility and Battery Storage, and the Vehicle Scrappage Policy. These policies provide subsidies, incentives, standards, and regulations for EV manufacturers, buyers, and service providers.

• Technology innovation: The industry has been investing in research and development to improve the performance, efficiency, and affordability of EVs and charging systems. The industry has also been exploring new technologies and business models, such as battery swapping, vehicle-to-grid, and smart charging, to enhance the convenience and value proposition of EVs and charging services.

• Consumer preference: The consumers have been showing an increasing interest and willingness to adopt EVs, especially in the urban areas, where the awareness and availability of EVs and charging stations are higher. The consumers are also becoming more conscious of the environmental and social benefits of EVs, as well as the lower operating and maintenance costs compared to conventional vehicles.

• Social impact: The civil society has been playing a vital role in creating awareness and advocacy for EVs and charging infrastructure, as well as providing feedback and inputs to the policy makers and the industry. The civil society has also been supporting the adoption of EVs and charging services among the underserved and marginalised segments of the society, such as women, rural communities, and informal workers, through various initiatives and programs.

The report also highlights some of the best practices and case studies of EV charging from India and other countries, such as China, Norway, and the US, which can serve as examples and inspiration for the Indian market. The report emphasises that the successful development of EV charging infrastructure in India will require a collaborative and holistic approach, involving all the stakeholders, such as the government, the industry, the civil society, and the consumers.

The report is a comprehensive and insightful analysis of the EV charging market and ecosystem in India, as it captures the current trends, challenges, and opportunities for EV charging. By providing a strategic and actionable framework for EV charging in India, the report can help create new economic opportunities along the value chains for EV charging and unlock the multiple benefits of EVs for the economy, society, and environment. 

References:

https://niti.gov.in/how-india-can-plug-electric-vehicle-charging-infra-holes#_ftnref1

https://rmi.org/insight/banking-on-electric-vehicles-in-india/

https://www.pib.gov.in/PressReleasePage.aspx?PRID=1703449

https://www.siam.in/statistics.aspx?mpgid=8&pgidtrail=13

https://home.kpmg/in/en/home/insights/2020/10/electric-vehicle-mobility-ev-adoption.html

https://home.kpmg/in/en/home/insights/2022/08/electric-vehicle-charging-next-big-opportunity-infrastructure.html