Indian Governments Contribution on Hybrid and Electric vehicles industry

In recent days like the rest of the world, in India too there is increasing interest for Hybrid and Electric vehicle. In April 2015, Indian government has introduced an scheme to subsidies the Hybrid and Electric vehicle. As I have indicated in the last blog Indian industry indeed trying to move towards more ecofriendly and efficient electric vehicles through the FAME India Scheme.

Pilot projects

 

Though the scheme has the subsidy as the main component (which will be discussed later), it has indeed has taken up a number of pilot project to ensure infrastructure and application synergy. Since an transportation industry has to be supported by infrastructure, service and demand, so most of these projects are limited by geographical niche and demand. As the subsidy plan is mainly for the end user so the first focus is taken towards small transportation need. Some of the example of these projects are

1.      Running pure electric vehicles (7 seater) in the last 2 Kms at Taj Mahal (Agra)

2.      Pure Electric 2 wheeler vehicles for home delivery (Dominos, KFCs etc)

3.      Pure electric 3 wheelers/small 4 wheelers for fruit and vegetable distribution and garbage disposal etc.

4.       Electric cars for taxi fleets, corporate hire and rental scheme use etc.

5.      Last mile connectivity from metro stations.

6.      Hybrid and electric buses for public transport and creation of clean air islands for selected areas

The good thing about these projects is that the demand condition is automatically fulfilled. Infrastructure and service is taken care by small geographic area of operation. Like project 1, 2 and 3, some of them are for purely electric mobility.  

 

Subsidy

Subsidy is a major part of the in the FAME India scheme. Indian government estimated a total expenditure of INR 14000 cr ($ 2.12 billion) for 6 yrs under these scheme. However Indian government expects to save usage of fossil fuel by INR 60000 cr ($ 9.08 billion)

In the phase 1 Indian government allocated a INR 795 cr for the first two year. Out of which INR 500 cr will be invested on demand incentives. This will be transferred directly to the consumer who will get the vehicles at a discounted rate to initiate operation. Indian government expects to get 15-16 million vehicles (2, 3, 4 wheelers and busses) on road by 2020 under this scheme.

Government decided to give 35% subsidy to pure electric vehicle and 25% on plugin electric vehicles that can at least go 15km in one charge. Similarly mild hybrids will get 15% subsidy. Due to lesser range Government is expecting the electric vehicles to be used only for city applications and Hybrid vehicles for long range application category. 

Many critics believe this subsidy scheme is to little to give it a push. But its definitely a start.

Testing and charging infrastructure

Indian government rule makes it necessary for the OEM to get certified by the testing agencies approved by the government to get the subsidy. So the testing agencies need to improve the infrastructure of the testing agencies. At the same time there is a need to improve charging infrastructure to keep the vehicles on road. As on today the only pure electric vehicle Mahindra e20 has a range of about 120 km with charging time of 5 hrs. So until there is a significant improvement in range and reduction in charging time, these vehicles will not be viable for most application. So the government needs to do more in this direction. It has allocated only INR 260 Cr for the improvement in this direction. This is not enough for a significant improvement.

Putting together Indian government has started looking into this area but the Government encouragement is not sufficient to give it a push. More is needed since its such an impiortant direction of evolution of the transportation industry.