Page 24 - Insurance Times Octoberr 2022

monsoon. Research suggests that having better and good expected to lead to the establishment of lithium-ion cell
quality roads in fact reduces GHG emissions as well as production facilities for indigenous EVs.
improves EV travel range.
Leading global players have shown interest in establishing
Supply/Source/Implementation: cell or battery pack manufacturing facilities in India. The
major Indian conglomerates also have outlined plans to set
To provide support to supply side Government can introduce
up such facilities. Meanwhile, the government is assessing
Regulations where automakers are required to produce and
plans to incentivize domestic battery manufacturing. In
sell EVs in a given region. For example, the California Zero
January 2020, NITI Aayog sought cabinet approval for a
Emission Vehicle (ZEV) mandate in USA, has been followed
proposal to provide subsidies to investors setting up giga-
by other nine US states, long back. China has introduced a
scale manufacturing units for lithium-ion batteries for EVs.
similar mandate through its new energy vehicle policy.
Several nations globally have considered or begun
The government think-tank, in a recent proposal that is likely
implementing bans on ICE vehicles sales and mandated to
to be reviewed by the PM's cabinet in the coming months,
shift to 100% EVs.
has recommended incentives of USD 4.6 billion by 2030 for
companies manufacturing advanced batteries. The proposal
Policymakers can provide research and development grants
is to provide cash and infrastructure incentives of USD122
to help improve and spur the development of local EV supply
million in FY22, which may be ratcheted up annually.
chains. In 2019, the Union cabinet approved a phased
manufacturing programme through its Mission on
India, with strong capabilities in certain EV components,
Transformative Mobility and Battery Storage, in this
other than batteries, can emerge as a hub for manufacturing
program it aims to support establishment of large scale,
and exports. These include wiring harnesses, permanent
export quality battery and cell-manufacturing giga-factories
magnets, BLDC motors, AC induction motors, thermal and
in India with a total of 50-gigawatt hours capacity.
cooling management systems, electronics (other than
semiconductors), plastics, etc. Auto component players in
This is created to incentivize local production of batteries
India are increasingly seeking to develop the requisite
and their components. Several state policies including
technological capabilities and capacities in these areas.
Gujarat, Andhra Pradesh, Karnataka and Maharashtra are
equating the central government's capital subsidies in order
to establish these large-scale units. Also, these states are Factors to Fast-Track electrification in
willing to support the infrastructural needs in form of India:
subsidies on land, capital and other utilities. Also, the
Directionally several factors, including the availability of
government has put regulations in place for dis-incentivizing
charging infrastructure, robust financing ecosystem, reduced
high-scale imports. For example, the central government's
battery prices and increased customer awareness, will pave
incentives for large/giga factories are related to their level
the way for the new era of EV adoption. Innovative business
of indigenization. If they achieve 60% indigenization by
models such as battery swapping have emerged to enable
2025, they are eligible for central government subsidies.
widespread EV adoption. The battery swapping model
alleviates issues of long charging time, range anxiety, high
Challenges for Local Manufacturing: upfront cost and battery reliability concerns for the EV
India's phased manufacturing plans are likely to face owners. To make this model workable, the operator needs
challenges, from the absence of adequate reserves of key to ensure standardization of batteries and operate in a
raw materials like lithium and cobalt. India has to depend closed-loop environment.
on other countries for its supply. The development of the
battery industry, charging infrastructure and local supply Recently, various tie-ups/partnerships have been entered
chains are critical for EV adoption. The Indian Space between OEMs/Operators and leading oil marketing
Research Organization (ISRO) has transferred its in-house companies (OMCs) for battery swapping solutions like the
lithium-ion technology at a nominal fee of INR1 crore to 10 one between Kinetic Green and BPCL. To drive EV adoption,
Indian industries for commercial production. This move is original equipment manufacturers (OEMs) and the central

24 The Insurance Times, October 2022