$4.6 Billion Incentive For Companies To Push Electric Vehicle Adoption In India

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The Electric Vehicle (EV) market in India is at a nascent stage. So far, the sales of EVs have been encouraging, albeit slow. One of the biggest reasons that have kept people away from EVs is the unavailability of the supporting infrastructure.

To push the future growth and adoption of EVs in India, the government has planned an eye-popping incentive scheme for companies willing to manufacture advanced batteries, specially designed for Electric vehicles.

According to Reuters, NITI Aayog has drafted a proposal that will help the government to push the sales of Electric vehicles in India and cut down the consumption of oil eventually.


NITI Aayog has been the driver of several key initiatives taken by the India government. The body has formed a view that the wide adoption of EVs will allow India to cut as much as $40 billion on oil import bills by 2030.

However, to achieve that vehicle manufacturing companies must work hand-in-hand with infrastructure companies who play an active and vital role in the acceptance of any new vehicle technologies by the people. The mass availability of batteries, highly optimised for Electric vehicles, could be a game-changer as it will change consumers purview about EVs.

The NITI Aayog has recommended $4.6 billion (Rs 34,000 crore) incentives by 2030 for encouraging companies to set up advanced battery manufacturing units. The increased production of batteries for EVs will iron out post-sales service concerns of consumers besides meeting the increasing demand by the Electric vehicle manufacturing companies.

Companies shall start receiving benefits from the next fiscal years itself as the draft suggest to pass on $122 million benefits from the next fiscal year and increase it with each passing year thereafter.

“Currently, the battery energy storage industry is at a very nascent stage in India with investors being a little apprehensive to invest in a sunrise industry,” the proposal said.

The writing is on the wall and like many other countries India too is exploring options to reduce its dependence on oil consumption. Despite being the second-largest country by the population and one of the top adopters of path-breaking technologies the lukewarm response to electric vehicles is the cause of concern for the government.


In FY 20, the sales of electric scooters and motorcycles in India reached 152,000 units, recording 20% YoY growth. The sales of electric cars In India was not so encouraging as well. Just 3,400 electric cars were sold during the same financial year in India. Just to put things in context, 1.7 million passenger cars were sold in India during the same period.

The government believes that it’s high time to push the local manufacturing of electric vehicles in India. Hence, the government has decided to retain 5% import duty on certain types of batteries, including the ones required for electric vehicles, and plans to increase to 15% in future. Such move will boost the confidence of local manufacturers and provide them with more favourable conditions to invest in manufacturing of batteries and infrastructure, such as charging stations, required to win consumers confidence in electric vehicles.

The current market for batteries in India is estimated worth $2 billion and would swell up to $14 billion in the next ten years.

However, the straining ties with China – the world’s largest manufacturer and exporter of batteries for electric vehicles – has made the Indian government accelerate the process of strengthening local manufacturing.

It would be interesting to see the market response to such a proposal once it comes into existence. The government is likely to review the proposal in the next few weeks.

Do you think that such incentives are lucrative enough for manufacturers or the government needs to do a lot more to bring the electric vehicle revolution to India? Do let us know your views in the comment section below.


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