India has made a global commitment to reduce carbon emission by 35 % by 2030 from the 2005 level, which requires a significant overhaul in the transportation sector. Electric mobility in the form of Electric Vehicles (EV) is a feasible alternative in achieving the task. EV has huge financial & environmental benefits, which the Government intends to use to further economic growth.
Government\’s Push For EVs
The Indian EV industry is far behind as it faces many encounters due to reasonably high costs and underdeveloped infrastructure. The Government has taken many initiatives to promote the adoption of EVs among the common masses by providing various fiscal and non-fiscal incentives. Some of the monetization incentives that the Government is currently giving include upfront capital subsidy on the purchase of EVs, setting up EV charging stations through Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India, (FAME) Scheme Phase II. Also, fiscal benefits include a reduced Goods & Services Tax (GST) rate from 12% to 5%. An income tax deduction can be claimed on the interest paid on loans taken to purchase EVs. Under the FAME policy, the Government has also delicened setting up EV charging stations to increase private sector investments and facilitate market adoption, increasing the number of Public Charging Stations (PCS) for EV owners.
EVs In The Priority Segment Lending (PSL)
In line with the Government objectives, RBI is also considering categorizing loans on EVs under Priority Sector Lending. It will reduce the cost of finance and provide more priority funds to the people, which will boost the market penetration of EVs. To further develop financing for EVs, Niti Aayog is working with the World Bank to set up a $ 300-million\’ first misfortune hazard sharing instrument.\’ The Government supported SBI Bank is the program director for this project, under which all-out financing is relied upon to be around $1.5 billion. Also, private players like Axis Bank and Private Foundation Advancement Gathering ensure arm, Guarant Co, has come together to execute an umbrella assurance system of $200 million towards speeding up the e-mobility environment in India.
In the first half of the current financial year, EV deals dramatically multiplied to 118,000 units. Industry insiders attribute the increase in EV sales to both interest and supply-side elements. Some motivating factors like Outreach by Auto manufacturers, improved charging infra, cost parity with standard vehicles, and falling battery costs are driving the Government\’s focus and positive public outlook towards the EV industry.