Page 23 - Insurance Times Octoberr 2022

transfer in order to make it more affordable. Evidence
suggests that financial subsidies have increased and
encouraged consumers to purchase EV. Currently India
imposes 100% import duty on fully imported cars with CIF
(Cost, Insurance and Freight), and it doesn't treat EV
separately from ICEs. Therefore, the government needs
immediately to subsidize EVs and ensuring purchasing ICEs
being relatively expensive via imposing higher taxes on
them. This will help the government to generate revenue
and which further can be utilized for improving
infrastructure demand.

Example as solution as adopted in aboard: Sweden and
As well as the companies involved for establishing charging France have taken a combination of approaches where they
infrastructure have difficulty in creating sustainable business have put heavy taxes on ICEs and offered incentives to
models as the profit margins are lower on electricity sold. purchase EVs through feebate systems. City planners can
Lack of local supply chains for parts and components used help cities identify zones and areas where use of EVs is to
for manufacturing EVs and EV batteries creates barriers for be especially encouraged. For example, in some parts of
local manufacturing. As these manufacturing facilities China license plate restrictions allow only certain vehicles
require large capital investments, which has high risk. to be on the road on certain dates. Note this is an alternative
to Delhi's odd-even scheme restrictions on vehicular traffic
Research shows that automakers are unwilling to make / transport to immediately reduce air pollution therein,
these investments owing to technological uncertainties having been implemented as a drastic solution, already
especially with regards to battery technology. Battery-as- being in vogue at present.
a-service business model was a new policy initiative that was
introduced by the Ministry of Road Transport and Highways Planners in European cities have created emissions zones in
(MoRTH) that allows for sale of EV without the pre-fitted cities to restrict or charge fees on ICEs vehicles. Norway has
batteries. MoRTH main argument for this policy incentive created additional benefits for increasing demand for EVs
is to delink the cost of battery and the vehicle, as batteries via allowing them access to bus lanes, fee waivers on toll
can account for almost 40% of EVs cost. roads, free access to parking. Though in India's case financial
instruments have been the primary mode for demand side
However, the notification caused some confusion among the incentives, cities are yet to encourage their citizens to shift
automakers. It was not clear that EV sold without batteries towards EVs. The transition to EV at local or city level also
would qualify for subsidies under the FAME II scheme. Also, has several challenges such as coordination between
the distribution of the subsidy between the automakers and departments, synchronization of action, spatial planning and
DISCOMs was unclear. Automakers also needed clarification financial constraints. It is crucial to note that Indian cities
on potential issues related to battery standards, safety, had already resorted to EV transition for their public bus
warranties and integration. Current all the 20 state EV fleets we see in Kolkata city life/transport (also providing the
policies have taken into consideration the reuse or recycling air-conditioning environment at the same time) with support
of batteries. However, the details of the process of recycling of the state and FAME II scheme.
or reuse of batteries is not explained by any state, which
could create another environmental issue if details of these The process of transition is slower than expected since there
are not yet vividly clarified in principle by the policy making are both governance and financial constraints at local levels.
bodies of Central and State Governments. The quality of cities roads will also play a critical role, as the
roads will need to be upgraded due to EVs being heavier
Currently requirement-side challenges are being addressed than ICE vehicles largely due to the battery. Under ordinary
by policymakers through various instruments such as circumstances most Indian cities have poor quality road
provision of subsidy to the consumer through direct money conditions and they are mostly likely to get worse during
The Insurance Times, October 2022 23