India plans to offer USD4.6 billion in incentives to entice battery makers and encourage EV adoption

According to report by Reuters, India plans to offer USD4.6 billion (about RM19.2 billion) in incentives to attract companies to set up battery manufacturing facilities. The move seeks to promote the use of electric vehicles in the country, while reducing its dependence on oil.

The sum was mentioned in a proposal drafted by NITI Aayog, which is a federal think tank helmed by prime minister Narendra Modi. The document also claims India could reduce oil imports by as much as USD40 billion by 2030 if electric vehicle usage was more widespread.

The distribution of the incentives, as the proposal recommends, will be done in stages, starting with cash and infrastructure incentives of USD122 million (about nine billion rupees or RM509.4 million) in the next financial year, with increments annually.

“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 said. It also notes that India’s current import tax rate of 5% for certain types of batteries, including those used in EVs, will be retained until 2022 – after which it will be increased to 15% to promote local manufacturing.

The push to promote higher EV adoption isn’t just an attempt to reduce oil dependence, but also to cut down on pollution in major Indian cities. Reuters reports that in the last business year, the world’s second-most populous nation saw just 3,400 EVs sold compared to 1.7 million conventional passenger cars.

While the proposal didn’t offer any estimate on how many EVs are expected to be on India’s roads by 2030, it expects annual domestic demand for battery storage to grow from 50 gigawatt hours (GWh) currently to 230 GWh in ten years’ time.

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