India has been one of the most rapidly growing car markets in the world. But to keep the electrification of its automotive industry in pace with the global markets, it needs a total transformation and significant intervention by the government and the industry players.

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India\u2019s import duty rate, one of the highest in the world, is a deterrent to manufacturers from outside. As one of the strongest auto markets in the world, India needs no more protection. Even if the duty on electric vehicles (EVs) is cut to 25%, from the current 100%, it would not pose a threat to the domestic players. But it would help drive investment.

Lower duties on fully-built cars, auto components and increased foreign direct investment (FDI) will help boost volumes, which is essential for localisation. Reduction in duties will help bring in high-end electric vehicles which will also make the segment desirable. At the moment, investing in full localisation is not feasible because of the limited size of the market. Manufacturers will decide to set up facilities in India when it is big enough.

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As an example, cutting auto import tariffs in China led to a significant jump in its EV market. Today, China dominates the EV market, accounting for half of all vehicle sales.

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The Indian EV narrative also needs to move beyond the number of charging points and come up with fast charging and longer driving range for the vehicles to help inspire confidence and acceptance of the customers.

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The lack of access and first-hand experience of the e-mobility space has acted as a deterrent to adoption. Industry thought leaders need a clear strategy to educate and nullify misnomers and confusion, building reliability in the minds of the target customers.

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Indian Auto 2.0

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The automotive industry is undergoing a fast paced revolution, especially in technology and design, and in the consumer perspective on buying cars. Driven by urbanisation, growing workforce, increasing income level and ease of availability of car loans, the consumer focus is on quality over affordability. This shift has ushered in better, safer and sustainable technology to the Indian car market. This change is here to stay and will make things more exciting every day.

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The need for a sustainable mobility ecosystem, both from an economic and environmental perspective, has led to the electrification of the powertrain. India is aspiring to realise its vision of 100% electric vehicles within the next two decades.

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Globally, industry observers believe that India has already passed the tipping point where sales of electric vehicles will very rapidly overwhelm ICE cars. Leading car makers, the world over, have set targets for complete electrification and the air is thick with expectation and enthusiasm. The Volkswagen Group has also earmarked 50% of the company\u2019s investments for EVs. By 2040, 100% of its new vehicles in the major markets should be zero-emission vehicles.

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Volkswagen has globally unveiled the Modular Electric Drive Matrix (MEB), its unique platform for electric cars. The company has launched Audi E-Tron in India and will bring in Porsche Taycan early next year .

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EVs have overcome their erstwhile shortcomings and the new models are slated to find better acceptance because of better running costs than fuel. The Government for its part is pushing clean energy with initiatives like the FAME scheme which will offer a further impetus to shape India as a manufacturing hub for EVs. All these together have placed India at the centre of e-mobility discussions by auto players in India and abroad.

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But would the e-mobility revolution in India be as rapid as in Europe or other developed countries?

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The simple answer is no.

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Enabling the transition

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Electric vehicle is the vehicle of the future. It is a cleaner and greener option for a populous country like India, where pollution is a major concern. The Indian consumers are evolving with better awareness of the benefits of lower emissions. However, the electric mobility adoption in India will follow its own course.

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Even though the cost of battery is going down, it is still a lot higher than the ICE fuel and not a viable option for a cost-sensitive market like India. With the government subsidies price parity is closer and only then will it make sense for localisation of battery manufacturing in India.

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The two and three-wheelers are set to lead the adoption in the short and medium term. Four wheelers will follow with commercial fleets in the beginning because of their better cost effectiveness and higher government support. Private ownership will be seen among customers with higher affordability for the time being. Price parity between the EVs and ICE vehicles in the second half of the decade can be expected to bring EVs within the reach of a larger customer base.

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What is crucial for India to be a leading EV manufacturer is volume. Allowing time-bound relaxation for import of EVs and major components will help the local EV manufacturer get larger volumes by expanding the market.

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Establishing an EV market involves a lot of hard work and the industry needs to work together for it. Effective collaboration among the stakeholders is the key to establishing the Indian automotive sector as a global manufacturing and R&D hub and effectively addressing the Indian customers\u2019 needs.<\/p>

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