India Intends to Inject Nearly $5 Billion in EV Battery Incentives to Boost Sector

At this point, plenty of governments have recognized that phasing out internal combustion-engine vehicles in favor of electric cars is inevitable if they wish to avoid climate disasters. As temperatures rise, ice shelves melt and wildfires burn, the need for alternative energy that is clean, renewable and doesn’t produce emissions has become crucial. And while electric cars check many of these boxes, most countries are still a long way from widespread adoption of EVs.

In many territories, that can be attributed to high purchase prices coupled with poor battery and charging infrastructure, and some governments are already working at eliminating these barriers to widespread EV adoption. India, for instance, is poised to offer up to $4.6 billion to companies setting up advanced battery manufacturing facilities. According to a draft proposal seen by Reuters, the move is part of the government’s plan to promote the use of electronic vehicles and cut down on its dependence on oil.

NITI Aayog, a federal think tank chaired by Prime Minister Narendra Modi, has drafted a proposal stating that the Indian government could slash oil import bills by 2030 by as much as $40 billion if electric vehicles were widely adopted. “Currently, the battery energy storage industry is at a very nascent stage in India with investors being a little apprehensive to invest in a sunrise industry,” the proposal says.

To get the ball rolling, the think tank recommended incentives of $4.6 billion by 2030 for companies manufacturing advanced batteries, beginning with infrastructure and cash incentives of 9 billion rupees ($122 million USD) in the next financial year. The incentives would then be ratcheted up annually. The proposal also reported that India plans to retain its import tax rate of 5% for certain types of batteries, including batteries for electric vehicles, until 2022. Afterward, the government will increase the import tax rate to 155% to promote local manufacturing.

India’s nascent electric vehicle industry has been severely held back by lack of investment in manufacturing and infrastructure, such as charging stations. Although the country is the second most populated on the globe, there were only 3,400 electric car sales compared to the 1.7 million carbon energy-powered vehicles sold during the last business year. It’s a long way to go to widespread EV adoption but thanks to the incentives, it’s an achievable goal.

The proposal estimates that it would cost manufacturers around $6 billion over five years to set up manufacturing facilities with the support of government facilities, greatly reducing the timeline to widespread adoption of electric vehicles in the country.

Analysts say North American electric carmakers like Fisker Inc. (NYSE: SPAQ) would gladly receive the kind of support that Indian battery makers will receive from their federal government.

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