India has emerged as one of the fastest-growing economies in the world, with several growth prospects and increasing interest from foreign investors in the country. Amid global uncertainties, a World Bank report has stated the nation’s GDP growth will be 6.3 per cent for FY23-24. The rise in the economy has paved the way for several sectors to flourish, and the auto sector is no exception. The auto sector has been a major contributor to the economy, which also accounts for 6.4 per cent of its GDP, according to the IBEF.


With the push of the world's economies to shift demands to greener options, India is also taking the matter seriously and promoting the growth of EVs in India. According to the Economic Survey 2023, the domestic electric vehicle industry in India will develop at a rate of 49 per cent by 2030, reaching 10 million sales every year. Owing to continued government support and policies to promote EVs in India, EV sales in India reached 1.17 million units in FY23, charging beyond 100,000 for six straight months with a record 155 per cent growth, according to Vahan statistics.


With a growing market, there are investment opportunities that could prove lucrative for investors, especially foreign bodies.


India's electric vehicle industry is still in its infancy. However, it offers the greatest unexplored market in the world, particularly in the two-wheeler market. With the possibility of 100 per cent FDI, new manufacturing centres, and intensified efforts to improve charging infrastructure, the E2W segment in India is gaining momentum.


The growth drivers for the Indian EV market include strong government support with federal subsidies, policies that favour deeper discounts for electric two-wheelers made in India, as well as an increase in localised battery storage production. Furthermore, there are several new startups that have emerged with innovative products to pounce on the EV opportunity and are providing several investment options for foreign investors.


Strong Government Support


The government has created a number of initiatives and incentives to boost demand for electric vehicles and encourage manufacturers to invest in R&D for electric vehicles and related infrastructure. Beginning with the National Electric Mobility Mission Plan 2020 (NEMMP), which was initiated in 2013 by the Department of Heavy Industry (DHI) as a plan for faster EV manufacturing and adoption in India, FAME I and FAME II have already been launched with the goal of increasing electric mobility and the number of electric vehicles.


Furthermore, a PLI scheme for electric vehicles was launched to boost productivity and make it easier to sell EVs to customers at a lower price. Moreover, the government launched a battery-swapping policy in 2022 to aid in the promotion of EVs in time-sensitive service sectors. In addition, the government aims to create special e-mobility zones to help reduce overcrowding caused by private vehicles. This is how the Indian government is strongly supporting the EV sector.


Growth In Infrastructure


The Indian EV ecosystem is experiencing rapid developments in terms of infrastructure. As of 2023, there are 6,586 public EV charging stations in India, according to data from the Ministry of Heavy Industries. Electric two-wheelers are likely to rely only on public charging stations for top-up charging. And as early users of electrification, they are fuelling rapid infrastructural development. In this regard, automotive players have already begun to deploy their own charging infrastructure to meet the growing demand.


According to Ministry of Power data, the Bureau of Energy Efficiency (BEE) has established action plans for the establishment of public charging stations in nine major cities. According to preliminary predictions, these cities will have 46,397 public charging stations (PCS) by 2030. Industry participants have also been quite encouraged and have taken an active interest in the broader EV charging ecosystem. While major OEMs work on EVs, a structure for the development of chargers, charging stations, and other services is being steadily built.


Surging EV Sales


In a short span of time, India has emerged as the third-largest global automobile market in terms of sales. This has been reflected in the sales of EVs as well. The previous fiscal year ended with tremendous EV sales as it charged past the 1 million mark for six consecutive months. According to Vahan data, the EV brigade is in charge, as sales reached a record high for a month in March 2023 of 131,175 units, surpassing the previous peak of 121,389 units in November 2022.


Leading the charge in sales were E2Ws, as they are the most affordable EV sub-segment in India. According to a report by JMK Research, the E2W market in India during H1 of FY2023 was 4.56 lakh units, which is double the sales when compared to the last fiscal year. These astonishing sales numbers at the start of the first half of the year indicate just how rapidly demand is accelerating for EVs in the country. This growth is likely to gain momentum for the rest of the decade, with E2W and E3W most likely to dominate the landscape, according to a report published by KPMG and CII.


High Time To Invest


The Ministry of Commerce and Industry stated that India has already emerged as a favourable investment destination, with FDI inflow experiencing 20-fold growth in the last two decades. This is the result of supportive government policies, technological advancements, consumer awareness, and a favourable business environment. In this regard, the EV segment is well positioned to grow in this environment as an eco-friendly and sustainable mode of transport, with the government taking an interest, rapidly developing infrastructure, and soaring sales of EVs.


According to independent research by the CEEW Centre for Energy Finance (CEEW-CEF), if India proceeds to make steady strides towards its ambitious 2030 objective, the EV market in India could represent a $206 billion opportunity by 2030. This would demand a total investment of more than $180 billion in vehicle manufacturing and charging infrastructure. Therefore, as the demand for EVs grows, so does the opportunity for both domestic and international enterprises to engage in and contribute to the development of India's EV ecosystem.


(The author is the founder at RunR Mobility)


Disclaimer: The opinions, beliefs, and views expressed by the various authors and forum participants on this website are personal and do not reflect the opinions, beliefs, and views of ABP Network Pvt. Ltd.


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