Indian government makes surprising u-turn on electric vehicle policy

“Everyday, new technology is coming into the market, and technology is always ahead of rules and regulations,” explained India’s minister for road transport, Nitin Gadkari at a press briefing in Delhi on Thursday, as he made the surprising announcement that the government will not be pursuing a policy to support electric vehicle (EV) growth.

This u-turn, which appears to have been a result of pressure from carmakers, such as Toyota Kirloskar Motor Pvt and others that had expressed concern about the EV plan, comes as a blow for India’s clean energy campaigners and fledgling battery storage industry.

Gadkari stressed that there is no need for any policy now, with Amitabh Kant, chief executive of the government thinktank on transport policy NITI Aayog, adding that what is required now are action plans. “In India, it becomes very tough to change rules and regulations, so let there just be actions,” he said, hinting that it will be for the market to decide whether India begins to adopt EVs in greater number.

Air pollution in Indian cities has reached critical levels in the past few months – a situation exacerbated by the nation’s clogged roads that are packed to the sidewalks with polluting vehicles. Hence, public appetite for cleaner modes of transport has been strong, and was partly a reason for the government’s proposal to shift to EV sales only by 2030.

This goal is no longer set, and instead companies will have the flexibility to continue producing and promoting all types of vehicles to the Indian market. “The fact that the government will allow the industry to work on any form of sustainable technology is itself a policy,” said Maruti Suzuki India chairman R.C. Bhargava. “So if there isn’t a policy on EVs, it is not a problem at all.”

Such logic is likely to be criticized by campaigners, who will point to the successful impact EV policies have had in Europe in helping to increase the percentage of cleaner cars on European roads to record, world-leading levels.

According to Indian media outlet, Live Mint, an anonymous government official revealed that, essentially, government finds the commitment to support EVs too costly, time-consuming and complex. “Implementing an EV policy package would need huge investments and with empty coffers, it is not possible for government,” the official said, adding that the idea is simply to leave the decision to the open market.

India’s largest EV producer, Mahindra Electric Mobility, expressed its dismay at the u-turn, telling Live Mint that continued government support is necessary if EV growth is to be maintained. “The existing FAME incentive scheme should continue for another two years, and EV should continue to be taxed at the current low level,” the firm’s chief executive Mahesh Babu said. “If these mechanisms continue, there should not be a problem.”

Sales of EVs in India are very low, owing mostly to high model costs and a lack of choice. There was a 37.5% increase in EV sales in 2016, but in actual terms only 22,000 clean cars were sold – in a nation of 1.3 billion people.

Thinktank NITI Aayog has previously suggested the creation of a manufacturer consortium for the development of battery technologies and all other common components required for EV production. It would appear, however, that such plans have now been shelved.