Mains Paper 3: Economy
Prelims level: Lithium
Mains level: Changes in industrial policy and their effects on industrial growth. Infrastructure: Energy, Ports, Roads, Airports, Railways etc. Investment models.
• The progression to electric vehicles is important for India because such vehicles are sustainable and profitable in the long term.
• Reducing dependence on crude oil will save the government money, reduce carbon emissions, and build domestic energy independence. Transition to electric vehicles is economically and environmentally viable option. This will also influence India’s foreign policy as our energy security dependence will shift from West Asia to Latin America.
Benefits of Shift to electric vehicles:
• Shifting towards EVs will help India to reduce oil dependency while solving the challenge of energy scarcity and moving towards renewable and clean sources of energy. India imported 228.6 MT of crude oil worth $120 billion in 2018–19, which made it the third-largest oil importer in the world in terms of value.
• Controlling Pollution, climate and resource and Mitigating Climate Change.
• This makes it all the more reason for India to make electric cars and vehicles a priority in the fight against the reliance on fossil fuels.
• New concern: India has had a growing appetite for lithium-ion batteries, and so, lithium imports have tripled from $384 mn to $1.2 bn.
• Lack of Battery Cell Manufacturing: There is a complete absence of primary battery cell manufacturing in India which poses the risk of increasing trade deficit.
• Building Charging Infrastructure: Another big challenge is the development of charging infrastructure which will need to be combined with existing refuelling stations and at alternative locations closer to homes.
• Limited Grid Capacity: According to a NITI Aayog report, India’s EVs market needs a minimum of 10 GW of
cells by 2022, which would need to be expanded to about 50 GW by 2025.
• Local Issues: Bringing transportation congestion, affordability, infrastructure and transit systems availability are localized issues, impede the standardization of EVs.
• Lithium ion and cobalt Industry still lack the range that would make them a viable alternative to internal combustion engines.
• Interestingly, lithium is also used as a drug to treat bipolar disorder and is soon becoming the metal to treat a world polluted by excessive carbon emissions.
• The government aims to see 6 million electric and hybrid vehicles on the roads by 2020 under the National Electric Mobility Mission Plan 2020.
• Faster Adoption and Manufacturing of Electric Vehicles in India (FAME India Scheme) for improving electric mobility in India.
• The GST reduction for electric vehicles from 12% to 5%.
• The Union power ministry categorized charging of batteries as a service, which will help charging stations operate without licences.
• Implementation of smart cities would also boost the growth of electric vehicles.
• This will be a long-term solution to clean our cities, build new markets, and skill people for new jobs towards an ‘Atmanirbhar Bharat’.
What measures needs to be taken?
• State and city-level players need to be involved so as to address several technical and infrastructural needs.
• Accelerating EV use in India should be linked to the “Make in India” or an ‘Atmanirbhar Bharat’.
• Investment is required (PPP model) for research and development in battery-making and exploring alternative technologies.
• Avoids multiplicity and reduces the cost of infrastructure, while making it convenient and safe for users.
• India needs a road map, with timelines, processes, well-researched impact studies, bold initiatives and robust investments.
• The number of privately-owned motorised vehicles rose from 29 million in 2002 to 160 million in 2013. This figure will almost certainly rise again, to over 500 million, by 2030.
• In comparison to CNG, H-CNG allows for a 70% reduction in carbon monoxide emissions and a 25% reduction in hydrocarbon emissions.
• Hydrogen Council (2020) on hydrogen cost competitiveness that states scaling up and augmenting fuel cell production from 10,000 to 200,000 units can deliver a 45% reduction in the cost per unit.
• As per a policy brief issued by TERI, demand for hydrogen in India is expected to increase 3-10 fold by 2050.
• With its policy intervention to support battery manufacturers by supplying lithium and cobalt, this industry is more likely to grow domestically to support India’s goal to switch to electric mobility. The Indian government is taking initiatives to take the front seat in electric mobility. This will be a long-term solution to clean our cities, build new markets, and skill people for new jobs towards an ‘Atmanirbhar Bharat’.