NITI Aayog in the driver’s seat for ambitious EV rollout plan3 min read . Updated: 23 Nov 2018, 09:10 AM IST
New Delhi: NITI Aayog, the government’s apex policy think tank, has been tasked with rolling out an ambitious electric vehicle (EV) plan, pushing the department of heavy industries (DHI) into a tertiary role for a policy that is aimed at projecting India as a global torchbearer of green vehicles.
The DHI under the ministry of heavy industries and public enterprises is the nodal authority for the automotive sector and was also in charge of drafting and implementing the Faster Adoption and Manufacturing of Electric and Hybrid Vehicles (FAME) scheme. Companies producing such eco-friendly vehicles were offered subsidies under the FAME scheme.
The prime minister’s office (PMO) was however dissatisfied with a DHI plan that sought incentives for electric vehicles before the recently-held MOVE Summit, said three people familiar with the matter. DHI had proposed ₹ 5,500 crore, which was approved by the finance ministry for the second phase of the FAME scheme but it was shelved by the PMO.
“The draft (for roll out of FAME scheme) prepared by the DHI was not up to the mark... Now with NITI Aayog leading the charge, a stable policy can be expected," said the first of the three people cited above. “Other ministries will also work in tandem with NITI Aayog."
Emails sent to both DHI and NITI Aayog on Monday remained unanswered until press time. An email sent to the PMO also did not elicit any response.
With NITI Aayog assuming the lead role, discussions with other ministries are expected to happen in a more cohesive and swift manner. However, with general elections scheduled for early next year, the think tank may not have enough time to put together a cogent policy.
“Finally, things related to the electric vehicle policy in India are falling in place with NITI Aayog playing the coordinating role with other ministries to come out with a comprehensive policy on electric vehicles," said Sohinder Gill, director, corporate affairs at Society of Manufacturers of Electric Vehicles (SMEV). Some are on a wait and watch mode.
“This will be an overarching policy for electric mobility and it remains to be seen how the coordination takes place," said Suvranil Majumder, head, electric mobility project, International Finance Corp.
To be sure, electric vehicle industry is in a nascent stage in India. India sold 56,000 EVs during 2017-18, growing from 25,000 in the previous year, according to SMEV. Sale of electric cars however fell to 1,200 units in 2017-18 from 2,000 units sold in 2016-17.
NITI Aayog to work with other stakeholders such as ministries of power, road transport and highways, and DHI to prepare the policy.
According to the second person cited above, any direct subsidy to customers is unlikely to feature in NITI Aayog’s plan as it plans to promote production of lithium-ion batteries in India—a move that will significantly lower the cost of an electric vehicle.
Typically, an electric car battery is almost half of its total cost. For example, Nissan Motor Co. Ltd’s Leaf is one of the world’s top selling electric cars. It costs about $33,000 in the US and its battery cost is at least half the car’s price.
Even as NITI Aayog gives shape to the EV policy, other concerned ministries will also make rules to enable faster promotion of electric vehicles, said the third person cited above. For instance, ministry of power will come up with a policy framework on changing infrastructure while MoRTH (ministry of road transport and highways) will issue guidelines for introduction of non-fiscal incentives such as a provision to issue license to teenagers between 16 years and 18 years.
NITI Aayog is also of the opinion that India should take a cluster-based approach in promoting such vehicles—largely derived from the way India-made BS IV fuel available to all of India, starting first with a certain number of cities. Therefore, the think tank has come out with concepts such as ‘Light House Cities’ project wherein electric mobility will be promoted through initiatives of centre and state governments and local municipal bodies. Pune will be the first city while other seven cities have already been lined up.
“This is the correct approach from the union government since Niti Aayog will now collaborate with other ministries and heavy industries for the main policy. Otherwise, there was too much confusion among the ministries. In the past also things kept oscillating between DHI and NITI Aayog but now things have settled," said a senior executive of a leading vehicle manufacturer requesting not to be identified.