Prioritise battery and charging infrastructure development

Mahindra & Mahindra is the only manufacturer of electric vehicles in India.SHIFT IN POLICYIndia, in 2015, launched a scheme called Faster Adoption and Manufacturing of Hybrid and Electric Vehicles under which it offered incentives for clean fuel technology cars to boost their sales to up to 7 million vehicles by 2020.Despite incentives as high as 140,000 rupees ($2,175) on some cars the scheme has made little progress, with the sales of electric and hybrid cars making up only a fraction of the 3 million passenger vehicles sold in India in 2016.

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The scheme, which expired on March 31, has now been extended by six months while future policy is worked out, two government officials said. Lack of clarity on policy risks delaying investment in the auto sector, one official added.The new Niti Aayog report, co-produced with U.S. consultancy Rocky Mountain Institute, outlines a 15-year plan, broken into three phases starting in 2017."Limit registration of conventional vehicles through public lotteries and complement that with preferential registration for electric vehicles, similar to that in China," the report said, in one of its most radical proposals.To kick-start the shift, the report suggests bulk procurement of electric vehicles, building standardised, swappable batteries for two- and three-wheelers to bring down their cost and having favourable tariff structures for charging cars.

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"Prioritise battery and charging infrastructure development," the report states, while setting a 2018 goal for setting up a 250 megawatt per hour battery plant with an aim to reach one gigawatt of production by 2020.It also recommends setting up battery swapping stations by 2018, common manufacturing facilities for components and increasing subsidies on all battery electric vehicles to bring them to cost parity with conventional models by 2025.Other suggestions in the blueprint include incentivising the use of electric cars as taxis by lowering taxes, interest rates on loans for purchases and electricity tariffs for fleet operators, and lowering duties on makers of such fleet cars.Puneet Gupta, South Asia manager at consultant IHS Markit, said the government would need to lead the change with generous incentives to achieve its goal."This is one of the most radical changes the government is talking about," said Gupta. "All cars being electric is a distant dream."