Transformational measures initiated by government

The landscape of regulatory policies for automobiles and fuels in India is highly dynamic and rapidly evolving. It is believed that like the information technology and telecommunication sectors, the future of industry is at the verge of a complete transformation. For a long time, policies and regulations in the automobile sector were incremental and gradual; however, recent decisions, like leapfrogging to BS-VI emission norms, 100 percent electric vehicles by 2030 in the public sector, methanol economy, fuel efficiency norms, etc., are metamorphic with highly compressed transitional phases as compared to other countries, and will have profound impacts in India given the high growth rate in the sector. Some such transformational measures that may have radical impacts on the automotive sector are outlined below.

Fuel efficiency norms

The government of India notified the new fuel efficiency norm for PVs in April 2015 (Gol, 2015). The new fuel efficiency standards came into force in April 2017 for petrol, diesel, LPG and CNG fuelled PVs. The standards are based on a corporate average fuel consumption (CAFC) system. The regulations envisaged that between 2017 and 2022 cars should become 17 percent more fuel-efficient. The new norms were formulated by the BEE and notified under the Energy

Conservation Act, 2001. As per the notification, these fuel efficiency standards are being implemented by the Ministry of Road Transport and Highways. After the implementation of these standards, India will also join the league of developed nations such as the United States, Europe, Japan and China who have a mandatory fuel efficiency regulation for passenger cars. In August 2017, the Government notified the fuel efficiency norms for heavy-duty commercial vehicles (HDVs), i.e. diesel vehicles of category М3 and N3 with gross vehicle weight of 12 tonnes and above: compliance with BS-IV emission norms, effective from April 2018. A star-based rating system has also been proposed by the BEE to rank vehicles on a scale of one to five stars based on their fuel efficiency. This supersedes the voluntary system wherein most automobile manufacturers have self-declaring fuel efficiency values of all passenger cars since 2009.

Research development on alternative fuels

The Ministry of New and Renewable Energy (MNRE) was the nodal Ministry for alternative fuels; however, the mandate for all matters relating to biofuels was allocated to MoP&NG in August 2017. Despite the policy measures, the target of blending of bio-diesel and bio-ethanol up to 20 percent by 2017 could not be achieved. The achievement of blending biofuels in gasoline and diesel has not even touched 5 percent so far due to inadequate manufacturing capacity and non-availability of non-edible vegetable oils and molasses. Since these biofuels are renewable and low-carbon fuels, production of biofuels has been reemphasized. India has recently established the country’s first second-generation (2G) ethanol plant at Kashipur in Uttarakhand in 2016 to convert all types of agricultural residues to ethanol, with optimum product yields. The plant, which has a capacity to consume 10 tonnes of biomass per day, is based on a globally competitive indigenous technology. Another new advanced bio-refinery plant set up in 2017 at Pune has an integrated production capability of one million litres a year of ethanol from a variety of biomass and a range of agricultural waste (SIAM, 2017). Further, the NITI Aayog came up with a plan for complete transitioning to alternative fuel like methanol produced from coal, biomass, etc. The Union Minister for Transport announced on 11 September 2016 that India will leapfrog to a ‘Methanol Economy’ to reduce import oil bills as well as to reduce emissions (Economic Times, 2016). The policy decision is based on a feasibility study conducted by NITI Aayog that revealed that the ‘Methanol Economy’ has potential to address the twin challenges of increasing oil import bills as well as the country’s growing carbon footprint. NITI Aayog is working on methanol blending of up to 85 percent (M-85) with gasoline.

percent EVs in public and 40 percent in private sector by 2030

In addition to facilitating policy implementation for alternative fuels like methanol, NITI Aayog has launched a report, ‘India Leaps Ahead: Transformational Mobility Solutions for AH’, toward complete transformation of mobility to 100 percent

EVs in the public and 40 percent in the private sector by 2030. The report suggests a radical shift of mobility by adopting a new and sustainable model for clean, cost-effective, efficient transport that is not only safe but job-oriented, less energy-intensive (reduced oil import bill), and also has minimum adverse impact on environment and human health. The report envisages three phased roadmaps for Electric Mobility up to 2032. The first phase (2017-2019) will focus on institutional capacity-building and aggregating Interoperable Transport Data (ITD) with enabling mobility solutions. The second phase (2020-2023) focuses on the development of markets, infrastructure and production capabilities in tandem with innovative business models. In the last phase (2024-2032), it is expected that the costs of EVs will come down significantly and allow economies of scale (SIAM 2017, Ghosh 2018a). In addition, all-EV travel by 2030-2032 will transform the way people travel in future. The model shift benefits inter alia include a drastic cut by 64 percent in energy demand and 37 percent in carbon emission by 2030-2032. Further, this shift can help India to save nearly Rs. 3.85 lakh crore by 2032 in diesel and petrol costs and save one gigatonne of carbon emissions between 2017 and 2032. The lew of 43 percent goods and services tax (GST) on hybrid cars and 12 percent GST on EVs makes it clear that the Government is promoting the latter only. There are indications that demand for a zero GST rate for EVs is under active consideration by the government to achieve the target of 100 percent EVs by 2030 in the public sector. EVs have significant advantages for cities which are facing a big challenge in ensuring cleaner air and providing transport access (Shukla et al., 2014). As per the UNEP study, in the future stricter emission standards could also provide a distinct advantage to EVs in Indian cities. If some parking spaces are reserved for EVs and charging facilities are provided in such parking spaces, it can incentivize EVs. Further, slower-moving electric 2Ws (speed less than 25 km/h) can be allowed on cycle tracks, which can help them avoid congestion and improve their safety. Para-transit modes like auto rickshaws are a cause of air pollution in many cities. Cities can address their air quality problems by shifting some part of their fleet to EVs.