“Adapt or face the music” is what the government appears to be telling the Indian two-wheeler and three-wheeler companies seeing their reluctance to even submit their plans to switch to electric vehicles. NITI Aayog, the government’s apex monitoring body that drives policies at the macro level, called a meeting of the major two-wheeler makers and told them to come up with their respective plans for the next five years on making electric vehicles. This meeting took place on June 21 and even after a lapse of more than 5 weeks, the companies have not reverted to the NITI Aayog.
The companies represented at that meeting included Bajaj Auto, TVS Motor and the DG of the Society of Indian Automobile Manufacturers (SIMA). Rajiv Bajaj, Venu Srinivasan and Vishnu Mathur were the ones to have been present at the meeting. Reports suggest that while three-wheeler maker Mahindra & Mahindra is willing to come on board, the two major two-wheeler makers, Bajaj and TVS, sought more time to firm up their plans and share it with the government.
It is now understood that the government may issue a direct warning to these companies that if they do not meet the deadlines for converting to electric vehicles, then these companies will have to bear the cost of the pollution in Indian cities.
The government has not hidden its aggressive posture on its intent to push for more electric vehicles on the road. There have been a series of steps taken over the past few months. There were already some concessions announced earlier for the purchasers of electric vehicles. Finance Minister Nirmala Sitharaman took it to the next level by saying that there could be a cumulative benefit to the tune of Rs 2.5 lakh for buyers of electric cars. The government had already laid out a roadmap that says all cab operators need to switch to electric cars by 2030 completely, going in stages.
Now in a major move, the GST Council has decided to bring down the GST on electric vehicles and chargers to just 5%. These were at 12% and 18% respectively.
The proposal in front of the government is said to be to ban all two-wheelers of 150cc and below that run on the conventional internal combustion engine by 2025. Similarly, three wheelers have to be out by 2023. This will cover over 80% of all 2 and 3 wheelers sold in the country. The government wants to know from the industry whether they will be ready for this change from their end. The companies could have submitted a tentative plan and told the government that they will get back with a more elaborate plan later, instead of totally ignoring the NITI Aayog’s directive.
The other area the government is moving within the electric vehicle ecosystem is to make the batteries required for the vehicles. There is a plan to set up four large battery-making units of the magnitude the US car maker Tesla has setup. This could entail an investment of $4 billion. International lending agencies like the World Bank and other multi-lateral institutions could be roped in to fund these battery making units.