India revives EV policy

India's government is renewing efforts to spur electric vehicles (EVs) after record high fuel prices and a depreciating currency threaten to hurt the economy and the BJP administration ahead of elections.

The government has drafted a new plan to boost EV production so that it accounts for 15pc of India's total vehicles in the next five years, said transport minister Nitin Gadkari. The government has an eventual target for EVs to make up more than 30pc of vehicles by 2030. Indian vehicle producers sold around 25mn vehicles in the 2017-18 fiscal year ending 31 March against 22mn a year earlier, according to data released by the Society of Indian Automobile Manufacturers.

The 15pc goal will not be a mandatory state-set target but the government will urge automakers to produce EVs, while requesting car hire companies Ola and Uber to increase the number of EVs in their fleet. Gadkari had warned last year that automakers should prepare for an all-electric future, or Delhi would make measures mandatory, although the government has since altered its EV policy stance. as well as a target to replace fossil fuel vehicles with a national all-electric fleet.

Delhi in July reduced the goods and services tax rate on lithium-ion batteries for EVs to 18pc from 28pc, while cutting the tax on fuel cell vehicles to 12pc from 28pc. It has decided to exempt EVs and vehicles running on fuels such as methanol from state permits.

The government is drafting the second phase of Faster Adoption and Manufacturing of Hybrid and Electric vehicles in India, first introduced in 2015, to boost the use of electric and other alternative fuel vehicles in the country, Indian prime minister Narendra Modi said at the Global Mobility Summit last week without giving details.

Higher fuel prices are leading to protests and making the BJP government unpopular with key state and federal elections due this and next year. The BJP government has refused to cut fuel taxes, maintaining that a 1 rupee/litre cut in tax rates will reduce revenue by Rs300bn ($4.2bn) on an annualised basis.

Gasoline cost Rs80.7/l yesterday in Delhi with diesel at Rs72.8/l. It is higher in other cities with central and state taxes accounting for 40-50pc of fuel prices. State-controlled refiner IOC set these prices citing the landed price of gasoline in India at $86.17/bl, diesel at $92.86/bl and an exchange rate at Rs70.91 to the US dollar.

India will be able to slash its annual oil import bill by Rs1.2 trillion in seven years by turning electric, according to Indian think-tank Niti Aayog, which has been tasked by the government to formulate an EV policy.

India has more than 170mn two-wheel vehicles, said Niti Aayog, and assuming that each vehicle uses around 200l of gasoline a year this creates demand of 34bn l.

But reviving plans for India's EVs will India's oil use and crude import demand. India's dependence on overseas crude is estimated to climb to as high as 10mn b/d by 2040 from 4.4mn b/d now if there is no transition to EVs. India spent Rs5.6bn in 2017-18 on crude imports.

India's oil product consumption during January-July rose by 6.8pc from a year earlier to 123.6mn t, the oil ministry said. Sales of diesel for the same period rose by 5.5pc to 1.72mn b/d. Gasoline use in July rose by 7.8pc from a year earlier to 632,000 b/d.