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Why UP is important for India's EV growth story

By rahul kamat,

Added 05 July 2024

The NITI Aayog estimated the need to achieve EV sales penetration of 70 per cent for all commercial cars, 30 per cent for private cars, 40 per cent for buses and 80 per cent for two and three-wheelers by 2030 to be able to achieve net zero carbon emission by 2070.

When Prime Minister Narendra Modi made the commitment to increase India's non-fossil electricity generation capacity to 500 GW by 2030, from the current levels of around 155 GW; reduce the economy's carbon intensity by 45 percent by 2030, compared to 2005 levels; bring down the total projected carbon emissions by one billion tons from 2021 till 2030 and achieve the target of net-zero carbon emissions by 2070 at the COP26 summit at Glasgow in 2021, it became amply evident that the country had to make massive strides in the field of electric vehicles to be able to achieve this kind of an ambitious target.

Sample this: The NITI Aayog estimated the need to achieve EV sales penetration of 70 per cent for all commercial cars, 30 per cent for private cars, 40 per cent for buses and 80 per cent for two and three-wheelers by 2030 to be able to achieve net zero carbon emission by 2070.

According to data from the Ministry of Transport and Highways, the number of registered electric cars increased to an all-time high of 140,251 units in March 2023, as against an average of 16,000 units per month pre pandemic. For FY2023, registrations of electric vehicles grew by 157.7 per cent despite the dissipating low base effect in the previous year. As of March 2023, there were more than 2.3 million electric vehicles in India with a majority of them being two and three-wheelers, each at more than 1.1 million vehicles.

The EV car registrations are mostly concentrated in the states of Uttar Pradesh, Maharashtra, and Karnataka. As of March 2023, the number of car registration in these states accounts for about 40% of the country's total, while their combined population is about 31% of India's population. Interestingly, Uttar Pradesh held over 14 per cent of India's EV market share in 2023, with the highest number of electric three-wheelers (accounting for over 40 per cent).  

While central government-led incentives and policy reforms have provided the necessary impetus leading to an increase in EV registrations across the country, the slew of measures undertaken by some of the state governments such as that of Uttar Pradesh, Maharashtra and Karnataka has facilitated creation of requisite infrastructure for smoother adoption of such vehicles.

Uttar Pradesh, in particular, which is home to the country's largest population base of approximately 240 million people, has been making steadfast commitments with a clear view to promote eco-friendly sustainable development in the State. As India commits to Net Zero emissions by 2070, the State of Uttar Pradesh aspires to de-pollute its transportation system which has been one of India's largest.

Boosting manufacturing capacity

With a view to attract investments and contribute to sustainable development, UP government came up with the New Electric Vehicle Manufacturing and Mobility Policy 2022 thereby providing an overarching framework to create a favourable ecosystem for promoting the EV industry in the State. The policy, which is being spearheaded by Invest UP, the investment promotion arm of the Uttar Pradesh Government is promoti faster adoption of EVs, reducing the cost of manufacturing rechargeable battery for such vehicles, attracts private investments for creation of charging infrastructure in the State and manufacturing of EVs and related component for large scale job creation.

Favourable policy landscape, incentives and subsidies provided by the UP government to both manufacturers and buyers of EVs has enabled it to emerge as the leading State in India's EV landscape, especially in the E3W segment, with total sales of 305,355 units in FY2024, capturing 17.42 per cent of the national market. This translates roughly into a year-on-year growth of 62 per cent. This apart, the State also holds 17 per cent share in E2W, 6 per cent share in E3W Cargo and 2 per cent share in e-cars at present. The State has been one of the largest beneficiaries under FAME 1 & 2 schemes of Government of India.

UP government is also implementing several key interventions to promote and enhance EV manufacturing in the State. It has identified over 2,000 acres of land in various industrial areas for developing EV manufacturing units. It is also exploring options to incentivize battery manufacturing units to support the growing needs of the industry. This apart, it is developing clusters in central and western regions of the State for auto ancillaries and battery pack manufacturing.

Facilitating setting up of charging stations

It is to be noted that a well-developed EV charging infrastructure is crucial and will go a long way to support the widespread use of such vehicles in the country as it helps alleviate potential buyers fear of running out of power during a journey. Uttar Pradesh currently accounts for nearly 5 per cent of the country's total EV charging stations. Out of 12,146 public EV charging stations operational across the country 582 are operational in UP.

The state government plans to facilitate land to service providers for setting up charging facilities in the State. It is providing a 20 per cent capital subsidy up to Rs 10 lakh for the first 2,000 charging stations and Rs 5 lakh for the first 1,000 swap stations. It is also providing 100 per cent exemption for integrated EV projects and ultra-mega battery projects.

Besides, Uttar Pradesh Electricity Regulatory Commission (UPERC) has already notified Special Tariff category for EV Charging. The state government also plans to regularly coordinate with UPERC for rationalising the tariff rate from time to time for EV charging.

With a view to promote EVs in public transportation, the state government plans to roll out EV public buses on prominent routes in select cities on PPP mode which includes development of charging stations on these routes as well. It has already introduced 700 electric buses in major cities to reduce air pollution and dependence on fossil fuels. The State Transport Department has implemented the central government's Scrapping Policy to phase out the ICE combustion vehicles older than 15 years running on road as it endeavours to attain 100 per cent transition of public transportation to EV in the cities by 2030.

By emphasising creation of charging infrastructure in a phased manner to enable smooth transition of the existing transportation system to EV and by encouraging transition of public transportation to non-ICE based vehicles, the state government is hopeful of inducing demand of EV in the State, particularly in the cities and other urban conglomerates.

This apart, it has set up over 500 training centres and 4,000 ITIs to support the industry's workforce needs and has also introduced battery/EV-related curriculum in ITIs. The state government has also been promoting facilities with in-house R&D centres for innovation in EV technology and collaborating with academic institutions and research organizations for enhancing EV ecosystem in the State.

The electric vehicles industry is at a nascent stage in India hovering around less than 1 per cent of the total vehicle sales. However, it has the potential to grow to more than 5 per cent in the next few years. As per IESA, the Indian EV industry is expected to expand at a CAGR of 36 per cent and states like Uttar Pradesh, which has been leveraging schemes like NEMMP 2020, FAME 1 & 2, and National Mission on Transformative Mobility & Battery Storage for funding and support, will play a pivotal role in this transformative growth story. 

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