Global concerns about climate change and the need to reduce our dependence on oil imports have been key factors in the rise of electric cars (EVs) around the globe. Since 2007, the Indian government has introduced a variety of policy initiatives to keep up with the global economy. The government's commitment to net-zero emission by 2070, as set out at the COP26 summit, emphasizes the importance of EVs being the 'future mobility'.
The dependence of most of the population on public transport is likely to continue, despite the fact that India has a lower ratio of cars per 1,000 people than countries like the USA, UK, and Australia. India must focus on electrification of mass transport systems, where e-buses can play a vital role. This will help reduce carbon emissions.
A number of policy initiatives have been taken in India to promote EVs. However, the existing market players in 2 and 3 wheelers segments of the Indian market (which require less capex) have shown a tremendous response. The existing commercial vehicle players are either entering or planning to enter the EV space.
According to a report, India sold approximately 5,15,600 electric vehicles in 2020, with only 600 ebuses(1). According to SMEV's report, approximately 2,36,802 EVs sold in India during FY20-21. Market sources indicate that e-buses accounted only for a small percentage of cumulative EV sales(2). Concerning the market players, approximately 74% of total ebus supply orders in India up to FY20-21 were fulfilled by relatively new market players(3).
Incentives offered by the government have driven a lot of the e-bus reforms. However, few key initiatives that contributed to the rise of the e-bus industry include:
(i), FAME II, which has an investment of INR 10,000 Crores, is aimed at providing upfront subsidies and establishing EV charging infrastructure. The scheme will support 7,090 electric buses with an incentive up to INR 50 Lakhs per. CESL has recently sought bids for 5,580 ebuses under FAME II's 'Grand Challenge.
(ii). The National Programme for ACC is an investment of INR 18,100 crore. It aims to encourage the establishment of manufacturing facilities for 50 GWh ACC technology and 5 GWh niche ACC technologies.
(iii). The PLI Scheme for Automobile and Auto Components, which has an investment of INR 25,938 crore is designed to encourage the manufacturing of high-tech automobiles and components in India.
These initiatives include a reduction in GST on EVs and the introduction of a vehicle scrappage policy. De-licensing public charging stations has also been done.
Despite all the above, the Indian ebus revolution has not reached its intended levels and is now facing its own set challenges.
(i). Dependency on imports Although the chassis and bus bodies for the ebuses can be manufactured locally, the ebus industry remains heavily dependent on imports from a select group of players to obtain a range of EV components.
(iii) Uncertainty about battery life and environmental concerns: There is uncertainty regarding the life expectancy of e-buse batteries (which are estimated to last approximately. The same cannot be determined yet. Additionally, environmental concerns have been raised by various organizations regarding the disposal of EV batteries.
(iii). Lack of infrastructure: To enable the country to transition to e-buses, massive infrastructure investment, including charging stations, is necessary. There were only 1,800 charging stations across India as of March 20214, compared to the 4,00,000. This is despite India's target of having 2 million EVs.
Finally, both the public and government are increasingly aware of the need to switch to e–mobility. It is important to realize that the impact of e–buses can only be felt when an entire ecosystem is created for them, government departments are streamlined to ensure a sufficient demand-supply balance, fiscal benefits, incentives, and R&D is encouraged on more cost-effective and efficient technologies. It will be interesting to see if the Union Budget can meet the expectations of the sector.
