The world is moving swiftly towards electric vehicles to minimize carbon emissions and preserve the sustainable atmosphere. India too is contributing its bit to the cause of electric mobility by promoting the usage of EVs in the country.
While it is true that India is the fourth-largest vehicle market and one of the fast-growing automobile markets in the world, India’s share in the global electric mobility market is very less when compared with the share of other countries like the US, the UK, China, Japan, etc. However, reports suggest that though the adoption of EVs is still in a nascent stage in India, it is going to increase manifold in near future.
EV Market in India
As per Invest India, the national investment promotion and facilitation agency, the Indian electric vehicle market is expected to become USD 2 billion by 2023. According to IESA, the electric vehicle market in India is expected to reach around 63 lakh units per annum by 2027, growing at a CAGR of 44% between 2020 and 2027. Also, a report by BIS Research states that the EV market will register a growth rate of 43.13% between 2019 and 2030. All these statistics from various organization only reinforce the tremendous potential for electric vehicles in India.
The EV market in India is primarily driven by the favourable policies put forth by the government to promote the adoption of electric vehicles. Growing concerns over environmental pollution, huge investments in the EV sector by major players, decreasing EV battery costs, etc. are some of the other factors driving the domestic EV market.
Govt. Support & Policies
The Government of India is keen to encourage EV adoption in the country and reduce environmental pollution. The Indian government is committed to reduce greenhouse gas emissions per unit GDP in the country by 33-35% by 2030, as a part of the Paris agreement. To achieve this target, the government is promoting EVs adoption in the place of conventional automobiles. The recently announced vehicle scrappage policy that aims to phase out the unfit and old vehicles from the usage also helps to boost the EV industry in India.
Several state governments, working in tandem with the central government, are coming up with innovative EV policies, considering the local conditions and needs to attract investments in the EV sector and boost the adoption of electric mobility. With several states announcing policies that provide both fiscal and non-fiscal incentives, the adoption of EVs is expected to register huge growth across the country.
A lot of companies are investing in the Indian EV space to capitalize on the opportunities in the industry. Ola Group is setting up a mega electric two-wheeler manufacturing facility in Hosur, Tamil Nadu with an investment of Rs. 2,354 crores. Some of the world-renowned automobile OEMs, such as Honda, KTM, Yamaha and Piaggio formed a business alliance to develop a standard swappable battery system, that serves as an alternative to conventional batteries in electric vehicles. A major name in the global EV landscape Tesla is also planning to start electric vehicles manufacturing plant in India.
Scope for MSMEs
The growing electric mobility market in India will create a comprehensive ecosystem for MSMEs in the country. The MSMEs in the automobile industry can support the OEMs as their support base, providing them auxiliary parts. For instance, EV battery manufacturing is one of the segments that MSMEs can explore in the electric mobility industry. Swappable batteries would largely cut down the cost of EVs and democratize the adoption of electric vehicle in the country. The government also plans to provide USD 4.6 billion incentives to companies that wish to setup advanced battery manufacturing units. The sector offers huge opportunities for innovative start-ups with disruptive ideas. So, it is a very good opportunity for MSMEs planning to enter into the sunrise sector of EV manufacturing.
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