Move over incentives, time for 'soft' mandates on EVs: Niti Aayog

Business Standard

3 days ago

After a slew of programmes to facilitate electric vehicle (EV) adoption in India, the central policy think tank Niti Aayog has now recommended that the government has done enough on incentives. It is now time to take the programme a step further with 'strong signals' through regulations and mandates.
'While over Rs 40,000 crore has been spent by way of incentives over the last 10 years, it has only reached a level where 7.6% of annual vehicle sales are electric. It is evident that continuation of incentives alone may not help reach the target of 30% EV sales in the next five years. As such, it is time to give a stronger push for the shift by introducing some gentle mandates and disincentives which will help signal the required direction more firmly. These could be over and above the incentives that currently prevail,' Niti Aayog said in its report, Unlocking a $200 Billion Opportunity: Electric Vehicles in India, on Monday.
The Aayog has recommended that the government announce a clear policy, with target timelines, for Zero Emission Vehicle (ZEV) adoption and design a progressively more stringent plan for mandating the production and purchase of EVs, while disincentivising the continued use/production of internal combustion engine (ICE) vehicles.
It also sought a mechanism for effective implementation and expansion of Corporate Average Fuel Efficiency (CAFE) norms to a wider segment of vehicles.
In his address, Niti Aayog Member and former cabinet secretary Rajiv Gauba emphasised that the mandates should be "soft," as the government does not want to cause disruption.
The Aayog suggested that the initial mandates be limited to certain segments of the vehicle fleet and should not be extremely stringent at first to avoid backlash.
'Apart from pushing a certain segment towards EV, they would signal a strong direction and nudge speedier action. They should become progressively more stringent, and have wider application over time,' it said.
The think tank recommended starting with vehicles like public transport buses, para-transit vehicles, government vehicles, and the rapidly increasing number of urban freight vehicles.
'These are fewer in number and would be easier to manage, besides offering higher public benefits. Limiting mandates and disincentives to such vehicles to begin with may not attract opposition but would, at the same time, signal the future direction for all,' it said.
On demand-side mandates, the Aayog recommended a certain share of the fleet be zero-emission vehicles, stringent vehicle emissions standards, higher registration fees for ICE vehicles, and higher taxes on ICE fuels.
It also advocated for a certain share of the production to be ZEVs, setting stringent emission standards for all vehicles manufactured, and a higher input price for ICE vehicles.
In other measures to boost EV adoption, Niti Aayog recommended that the government focus on a subset of the vehicle fleet, based on the potential benefits from transitioning such vehicles to electric and the ease of providing the required ecosystem for them.
Additionally, it sought the adoption of model cities to focus on saturation in limited geographies rather than on an even distribution across the country.
It also suggested enabling finance for e-buses and e-trucks, focusing on services delivered rather than assets procured, shifting capital costs to operating costs, scaling R&D on new battery technologies, strategically scaling charging infrastructure, and enhancing awareness and information systems.