Indian Mobility Industry

Indian Mobility Industry

September 2019

The Indian automobile industry is one of the largest and fastest-growing auto markets  in the world, and it accounts for 7.1 per cent of the country’s Gross Domestic Product (GDP). It is estimated to grow at around 10-15 per cent per annum, to reach US$ 16.5 billion by 2021 from around US$ 7 billion in 2016. The Indian auto sector also accounts for a significant share of the country’s manufacturing facilities and is expected to increase this share to 25 per cent by 2022, significantly up from 15 per cent in 2017.
A majority of India’s auto industry is driven by vehicles running on fossil fuels. However, with increasing environmental concerns, the country has taken steps towards transforming its auto market to a more sustainable model–one running on renewable fuel.

The Indian electric car market size was valued at $71.1 million in 2017 and is projected to reach $707.4 million by 2025, witnessing a CAGR of 34.5% during the forecast period. Government schemes and subsidies are playing a major role in the growth of the market. In addition, the growing environmental concerns owing to high pollution levels in major cities of the country are also positively affecting the market growth.

India is in fourth position as highest Carbon Dioxide emission. Transport sector accounts for a significant share of worldwide energy consumption and carbon emission. The carbon emission in this sector accounts 24% among other sources. The expert advice to move towards the Green mobility is one of the option for sustainable future. 

many factors make green transport is still challenging , including lack of will and political awareness, tax incentives for fossil fuels, lack of access to financing, lack of financial and human resources, lack of prioritisation of urban mobility in public investments, and lack of data from the sector, reluctance from the Automobile industry people.  
The government has announced an outlay of ₹10,000 crore for Phase 2 of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME 2) scheme, to boost electric mobility and increase the number of electric vehicles in commercial fleets.

₹1,000 crore has been earmarked for setting up charging stations for electric vehicles in India

How will the incentives be offered?

The centre plans to roll out an incentive of ₹10,000 per kilowatt (kW) for two-, three- and four-wheelers, based on the size of their batteries. To encourage state transport units (STUs) to buy more electric buses, ₹20,000 per kW will be offered as incentive. The incentives may further be subject to bidding by original equipment manufacturers.
Budget 2019 proposal:

  1. GST reduction from 12% to 5 % for EV vehicles
  2. Additional Income tax deduction on the Interest paid on the loans taken for the purchase of EV vehicles .
  3. make India a hub for EV manufacturing and Lithium Battery manufacturing
  4. Big push for Solar PV manufacturing which can drive Green charging Infrastructure.
In FY2019, total EV sales in India crossed the 7,50,000-units mark and reached a total of 7,59,600 units. This includes electric two-wheelers (1,26,000), electric three-wheelers (6,30,000) and electric passenger vehicles (3,600), 

FY2019 statistics reveal a significant year-on-year jump, the ground reality – after the government's announcement of the much-awaited FAME II (Faster Adoption and Manufacturing of Electric Vehicles) scheme


India Electric Car Market Competitive Landscape

Currently, the Indian electric car market is highly consolidated and is dominated by few players. Mahindra Electric Mobility Ltd. is the only manufacturer of BEVs and leads the market in the country. Other players such as Toyota Kirloskar Motor Pvt. Ltd., BMW AG, Volvo Car Corporation, and Honda Motor Co. Ltd. are offering HEV models in the market. However, with the Indian government taking initiatives to boost the market growth through favorable policies and incentives to support the adoption of electric vehicles, other automotive players have ventured into the Indian electric car industry. Furthermore, with the advent of established automotive manufacturers, such as Tata Motors Ltd., Hyundai Motor Company, and Honda Motor Co. Ltd., the competition is expected to intensify during the forecast period.

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