Why India Is Poised To Become A Global Hub For The EV Ecosystem
17 Oct 2024, By Deya Bhattacharya
17 Oct 2024, By Deya Bhattacharya
According to a recent estimate, sales of electric vehicles (EVs) in India are expected to hit 10 million per year by 2030. The domestic market value is also predicted to reach $113.99 by 2029 — a significant increase given that the value was only $3.21 billion in 2022.
There is, however, an even bigger trend emerging in this sector. With its abundance of affordable labour, strong network of ports and roads, and favourable government support for domestic manufacturing, India has all the ingredients to become a major global hub for EV manufacturing over the next decade. The goal, indeed, is to achieve net zero carbon emissions by 2070 — for which the electrification of the automotive sector will play a key part.
The government recognises the potential that India has in this sector and is supporting the production of EV components in multiple ways. As part of the Make In India initiative, the government has implemented the Production Linked Incentive Scheme and multiple tax breaks for the production of battery cells and other EV components. Log9 Materials, for instance, is a Bangalore-based startup that has developed lithium battery cells specifically designed to withstand tropical temperatures. There has also been continued investment in setting up a network of EV charging stations across India, including tier-2 and tier-3 cities. Furthermore, the government has approved the FAME-II policy, with $1.43 billion earmarked to support manufacturing and EV consumption.
In addition to government support, international collaborations are key to introducing new technologies and tackling the challenges that India faces on its path to becoming an EV hub. Lithium reserves, for instance, are on the low side in India, and the joint venture firm KABIL is actively building partnerships with mineral-rich nations like Argentina, Australia, and Chile to help ensure a consistent supply of lithium. Recently, there has also been considerable investment in the manufacture of EV batteries. Agreements include a $343 million deal by Lucas TVS and 24M Technologies to build a Giga factory in Chennai, and $1.58 billion from Tata Group to set up a lithium-ion cell plant in Gujarat.
There is a third component — the availability of skilled labour. While India’s labour force may not currently possess all the technical skills needed in the EV sector, the government is actively working to change that by establishing Industrial Training Institutes (ITIs) with special programmes for EV training. The Skill Development Department is also investing in counselling services for students who may wish to pursue careers in the EV sector. There is also considerable opportunity for private companies to build their own skilling programmes for current and prospective employees.
The government has been offering multiple subsidies on the purchase of EVs, including a reduction in GST from 12% to 5%. The impact of these subsidies is already gaining traction — in May 2024 alone, EV sales increased by 20.88% to 1.39 million units. Corporates as well as the government recognise the importance of investing in EVs as the future of automobiles. Companies like Ola, Tata Motors, Hyundai, and Mahindra & Mahindra are actively building their EV capacity, while the state government of Karnataka has committed to electrifying 100% of three-wheeler and four-wheeler cargo vehicles by 2030.
In addition to government subsidies and strategic manufacturing collaborations, it is important to invest in targeted marketing strategies to boost demand for EVs. There is potential for reaching first-time car owners in particular, many of whom are younger and more conscious about the impact their activities have on the environment. Showcasing the sustainability of electric vehicles, as well as their ease of use, will help sway the buyer’s opinion in their favour. Strategic discounts on purchase and support will also help win over customers, as well as easy access to charging stations. The government’s e-AMRIT portal, by which users can locate charging points near them, is a useful step in this regard.
India is one of the world’s fastest growing economies, and the evolution of the EV manufacturing sector will significantly propel that growth. Both government and corporate support are key to making that happen, and current investment patterns appear positive on that front. As the world rethinks its approach to sustainable industry, having optimised manufacturing hubs will enable materials and finished goods to flow along paths that are the most resource-efficient. India, with its favourable geopolitical climate and reputation as a manufacturing centre, is ideally poised to lead the world in that regard.
As the world rethinks its approach to sustainable industry, having optimized manufacturing hubs will enable materials and finished goods to flow along paths that are the most resource-efficient. For more insights on how we can help elevate your brand in the evolving EV landscape, feel free to reach out to us!
