Why Is India Betting Big On Electric Vehicles?

Last updated on April 18th, 2022 at 06:26 am

According to a Crisil report, the Electric vehicles (EVs) segment present an opportunity of almost Rs. Three Lakh crore for various stakeholders of the industry in India in the next five years. Keeping in mind how fossil fuels will have to finally have to be done away with, India is fast moving towards making investment into the renewable energy space.

There are many factors that are making up for a gradual but huge spurge in the estimate number of sales. These include rise in fuel prices, government support with schemes such as Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India (FAME-India), Phased Manufacturing Plan, and Production Linked Incentive as well.

The Atma Nirbhar or Self reliance initiative spearheaded by current PM Narendra Modi is another reason why India is keen to move into the EV segment. Further, the added Western pressure now over buying fuel from Russia in itself becomes an evident reason for India to expediate its movement towards renewable energy sources for fuel.

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The report has confirmed that the original equipment manufacturers (OEMs) and component manufacturers can garner about Rs 1.5 lakh crore across all EV vehicle segments. Also, over Rs. 90,000 crores in disbursements for vehicle financiers, with shared mobility and insurance accounting for the balance.

For electric two-wheelers (2Ws) and buses, the percentages rose to almost two per cent and four per cent, respectively. “Start-ups with new-age business models as well as OEMs with an established business have evinced interest in manufacturing EVs. Many state governments have also provided demand incentives, and capital assistance for setting up greenfield manufacturing plants,” Crisil said in a report. The report indicates that by 2026 adoption of electric two and three-wheelers will rise even without subsidy, due to parity of ownership cost with ICE vehicles.