India must put its electric vehicle transition plans

So far, India’s EV adoption story has primarily been driven by market-pull policies in the form of financial incentives to consumers provided by the national and state governments. While these policies have helped kickstart an ecosystem for EVs, the uptake has only been about 1 per cent of the total new sales.

A strong regulatory push is the missing piece in the policy puzzle to accelerate the transition to EVs. Leading EV markets — China, the EU and the US — have demonstrated the impact of well-designed mandates and strong regulatory standards on bringing about transformational market shifts. India, too, has a strong case to adopt these policy-push measures going forward.

First, India must announce a mandate for manufacturers of two-wheelers (2Ws) and three-wheelers (3Ws) to sell 30 per cent zero-emission vehicles (ZEVs) by 2030. In spite of being the world’s largest market of 2Ws and 3Ws, India’s big conventional automakers have been reluctant to shift to EVs so far in these segments.

China’s New Energy Vehicle (NEV) mandate introduced in 2018 pushed car manufacturers into increasing output of EVs. The mandate also gave an impetus to global automakers to tie up with local Chinese players.

To help Indian manufacturers comply with ZEV mandates, policymakers should lay out annual targets for compliance combined with a credit mechanism, including provisions for banking and trade of credits.