INDIA INC. CHARGES TOWARDS SUSTAINABLE CHANGE WITH EV PUSH
As the global sustainability movement gains momentum, Electric Vehicles (EVs) are propelling us into a new era of emission-free mobility. Companies worldwide are swiftly embracing the EV revolution to shrink their environmental footprint and lessen their reliance on fossil fuels. This surge towards sustainable transportation is not just a trend; it's a transformative shift towards a greener future.
Amidst concerns such as air pollution and climate change that pose a grave threat to the world, India Inc. finds itself in the spotlight. With its proactive embrace of EVs, India is poised to lead the charge towards meaningful change for domestic and foreign players alike.
India’s embrace of EVs signals a proactive shift towards clean mobility, positioning the nation as a global leader in manufacturing driven by rising demand, evolving consumer choices, and favourable governmental policies.
The exponential growth of India's EV sector is unmistakable when backed by concrete data. Starting at $1.2 billion in 2021, it surged to $3.2 billion in 2023, and is poised to skyrocket to an estimated $113.99 billion by 2029, boasting an impressive 66.52% compound annual growth rate (CAGR). This phenomenal expansion is underpinned by a shifting mindset towards sustainability, reflected in a remarkable 90% rise in EV passenger vehicles and an astonishing 300% surge in commercial EVs.
By the numbers, projections indicate that by 2030, approximately 40% of all vehicles in India could be EVs. However, sustaining this trajectory presents a formidable challenge for India Inc. due to the existing limitations of the country's EV infrastructure.
From a macro perspective, there are four important pillars of EV infrastructure- Power generation, EV Original Equipment Manufacturers (OEMs), battery manufacturing, and charging infrastructure. A robust foundation of these 4 aspects ensures a sustainable growth for a country’s EV industry. Among these, India has already excelled in power generation, with several highly efficient organizations working to support the growing demand.
However, India Inc. still has a long way to go for the other 3 aspects that require an astute focus on manufacturing vital components of EVs. Consider battery manufacturing, which is potentially the most important component of an EV considering batteries account for 40% of the total EV cost. Despite several major firms are already making significant investments in building end-to-end battery manufacturing capabilities to reduce dependence on costly imports, there is still a long way to go before India Inc. is completely self-sufficient in this space.
The charging infrastructure is another major hurdle in the country, which despite the meteoric rise in demand, is still only at 1/10th of USA and 1/20th of China in terms of availability and density. Additionally, the current charging infrastructure majorly caters to the B2B segment,
which will need to evolve soon considering the rising demand in the B2C EVs. Another hurdle faced here is the lack of standardization of charging points in the country, which could pose a significant challenge in the long run if kept unchecked.
For EV OEMs to achieve self-sustainability throughout the entire value chain, comprehensive support is essential from both the government and suppliers at every stage of the process.
In the current scenario, Indian OEMs are highly dependent on importing skills required for battery manufacturing and R&D. The Government can support industry by introducing a dedicated visa category for incentivizing highly skilled workers. Streamlining the visa process and offering tax incentives to workers skilled in the EV sector will allow the country to tap a global talent pool, propagating knowledge transfer and advancement in in-house manufacturing.
In addition to accessing global talent, India Inc. could also benefit from accessing talent from adjacent industries to bridge gaps in the EV sector. Collaborations with academic institutions, research organizations, and startups can foster indigenous talent development, and investing in training, skill programs, and apprenticeships can nurture skilled professionals for EV innovation.
For India Inc, achieving global leadership in the EV sector hinges on selecting the right leadership. Adopting sustainability is an undeniable imperative, and the decision of business leaders of Indian firms to transition towards adopting EVs in their value chain will be pivotal in charting the company’s growth trajectory. Business leaders can drive strategic partnerships, leverage their expertise to gain investments, and provide direction to firms to lay a strong foundation for the subcontinent’s EV industry.
As for the Indian government, it has spearheaded EV manufacturing initiatives like FAME and EMPS, showing commitment to a greener future. Additionally, it is also pushing for efforts such as Green Credits to globally incentivize reduced environmental impact.
However, further incentives are needed to bolster the development of the EV ecosystem. For instance, the government could provide tax benefits and grants across the value chain to OEMs, battery manufacturers, and other stakeholders. Reducing R&D costs for these players allows companies to focus on innovation, while government-backed initiatives and industry partnerships drive breakthroughs in battery technology, charging infrastructure, and sustainable mobility solutions.
The existing regulatory support has led to increasing adoption of EVs in last-mile deliveries by ecommerce giants and in employee transport. However, the real potential lies in promoting EV adoption in public transport and goods movement sectors, where the impact on reducing carbon emissions can be most significant.
Yet, there are major challenges in developing such heavy commercial EVs, which underscores the need for investing in R&D to hasten the adoption process.
In essence, India Inc is poised to become a global EV manufacturing powerhouse, as the country advances towards a greener future. With favourable economics, rapid EV sales
growth, and a robust ecosystem comprising power utilities, EV manufacturers, battery producers, and charging infrastructure, India Inc. has all the necessary tools to propel itself as a leader in clean energy mobility. The collaborative efforts of policymakers, industry leaders, and consumers will pave the way for greener, more efficient mobility solutions, not only benefiting India but also making a significant positive impact on the global stage.
Rahul Mathur is the Senior Partner- Infrastructure, Construction & Real Estate Practice, TRANSEARCH India
2024-04-29T15:06:47Z dg43tfdfdgfd