Analyzing the impact of India's new electric vehicle policies on Corporate law

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Author’s name: Shilpa Sarkar

5^th Year B.A L.L.B

Sureswar Dutta Law College, Howrah, University of Calcutta.

Table of Contents

Abstract:

Electric vehicles are becoming more and more popular these days and one of the essential elements automobile revolution. The electric vehicle industry is continuously growing in India. It is less than 1% of the total vehicle sales however, has the potential to grow more than 5% in few years. At present there are more than 2.1 million EVs on Indian roads along with ten thousand plus charging stations.[1] The industry volume have been flaunting mostly depending on the incentives offered by the government as in 2023 Uttar Pradesh led the charts with more than 5 lakh EV registration followed by Maharashtra at 3 lakh registration while Delhi took third position and Bangalore at fourth spot at 2 lakh registration. Many serious players like Hero, electro Artharam, Avon, Lohia, ampia etc, are continuing with the mission to enforce positive change in the banner Often a major percentage of electric two wheelers are currently sold are slow speed that is less than 25km per hour, scooters that do not requires registration and licenses, almost all electric scooters run on Lead batteries to keep the prices low.

Introduction:

Which generates power by burning any form of crude oil. Electric vehicles are revolutionizing the automobile industry as we Basically an electric vehicle is the medium of transport which is Runs through electricity Instead of the internal combustion engine, speak from two wheelers to cars and even buses to aircrafts are the inevitable future of transportation by 2025.[2] It is estimated that about 20% of all new cars are sold worldwide will be electric and by 2030 this number is expected to rise to 40%.[3] Although, they are taking over the market right now they were times in history When EVs were the preferred mode of transportation but lost out to conventional internal combustion engines or IC engines car for their poor range and heightened Costs. so let’s take a step back to understand more and look on the revolution and impact of EV, to be continued going back a few centuries it all started in 1828, when Annoys Jedlik developed a small electric car With an electric motor, even though his model was nothing like the EVs we have today[4], it definitely set The foundation for future innovation on to the 1830s Thomas Davenport experimented with DC electric motor and invented a loco motive to run on an electrified track[5] but It was not until, later on in the decade that focus shifted to the batteries when professor Sibrandus Startingh of grown engine developed a small-scale electrical car operating on non-rechargeable batteries[6], in addition to this Robert Davidson built An electric locomotive that worked on Galvanic Batteries. Only about 20 years later in 1859 the rechargeable batteries come into play after the invention of the lead acid battery by Gaston Plante[7], picking up where plant left off Camille Faure improved battery capacity which initiated manufacturing of batteries on larger scale.

Towards the end of the 19th century William Morrisons Developed a functional Electric vehicle during this period many car Companies started manufacturing electric vehicles, as it appealed to them for having overcome limitations of the internal combustion engine car like unpleasant sounds, smells and vibrations as well as the hand cranking mechanisms. These was the very limitation that drove the IC cars to make strides in development, and this did not take long as the launch of the model T by Henry Ford in the beginning of the 20th century brought the hype over EVs to a grinding halt to mass production Of these gasoline powered cars outshined the EVs with increased ranges easily availability of fuel overall affordable pricing and introduction of an electrical starter that are no longer needed manual hand cranking as the ownership of EVs exponentially decreased. Gasoline powered cars rained for the next 30 years but all good things must come to an end, and this is exactly what happened on the 1970s when the oil crisis came like a wrecking ball fuel costs rockets and concerns about the pollution.[8]

Origin of Electric Vehicles:

The first Electric Vehicle was built by Frenchman Gustave Troupe in 1861. It was a tricycle powered by a direct current motor fed by lead acid batteries.[9] The public became interested in horseflies carriages or automobiles as these vehicles were now called. The following 20 years were an era during EVs competed with their gasoline counterparts. This was particularly true in United States, where there were not many paved roads outside a few cities. The limited range of EVs was not a problem. However, in Europe the rapidly increasing number of paved roads called for extended ranges favouring gasoline vehicles. During the 1970s and 1970s concerns about the environment spurred research on EVs. However, despite advances in battery technology and power electronics, their range and performance remained obstacles.

In the starting of 21st century private and public sectors now commit to vehicle electrification because of the consciousness in the environment. Later oil prices reach higher and higher. In 2010 the Nissan Leaf was launched.[10] The world largest electric car sharing service, Autolib was launched in Paris with a target stock of 3,000 vehicles. The global stock of EVs reached around 50,000.[11] The French government felt consortium committed to purchase 50,000 EVs over four users Nissan Leaf won the European Car of the Award in 2011. Now each country is developing the facilities regarding electric vehicles including India with a global step to eradicate the global warming and climate change issues

What is an electric vehicle:

Electric vehicles are an eco-friendly alternative to the traditional fossil fuel cars. An electric vehicle is a type of vehicle that is powered by one or more electric motors using energy stored in rechargeable batteries or other energy stores devices. Unlike traditional internal combusting vehicles EVs, use electricity as their primary source of power, for eliminating pollution, for fossil fuel and EVs produce no direct air pollution. [12]

Basically there are three types of EV

1) Battery Electric Vehicles: These EVs have rechargeable batteries that are solely powered by electricity, since they do not emit green- house gases they are not equipped with a tele-pipe and motor controllers instead of internal combustion engines.

2) plug in hybrid electric vehicles: These vehicles Run on electricity and gasoline and have the ability to shift between the two as needed within their mechanism is a battery to drive the electric motor and a fuel tank to fill the gasoline and run an internal combustion so in case the battery runs out of charge we can continue to drive on fuel or vice versa.

3) hybrid electric vehicles: Similar in the case of these kind of electric vehicle are also powered by gasoline and electricity but unlike the plug in hybrid EVs The battery cannot be charged directly instead the battery gets charged through a mechanism called regenerative braking as well as by the IC engine in both plug in hybrid and hybrid electric vehicles, the battery and IC engine works together to maximize performance, bring down fuel economy and reduce carbon dioxide emissions.

Advantages of electric vehicle[13]:

Improved air quality: the use of electric vehicle instead of combustion engine helps in reducing pollution and harmful pollutants which improves the air quality and public health.
Lower fuel costs: Absolutely electricity is cheaper than gasoline and maintenance cost are lower due to fewer moving parts comparison to crude oils.
Renewable energy integration: The electric vehicles can be charged with electricity with renewable energy sources that facilitate a more sustainable energy system.
Zero emission: More use of EVs will help to zero emission by reducing air pollution and noise pollution because it does not produce tailpipe emissions.

Policies of Indian Government to promote electric vehicles:

According to the report the policy will be rolled out initially on a smaller scale, this will help in ensuring smoother transition and better cooperation from the automobile sector. The newly approved policy related to import tax on electric cars as we all know the companies have to pay 70 to 100% import duty on electric cars but from now companies have to pay only 15% import tax on their imported electric cars. The Ministry of Commerce and Industries issued a notification about this newly launched EV policy. But there are some terms and conditions as the Indian government has reduced the tax from 100% to 15% every global EV company will be benefited with it, firstly the manufacturers have to build their own manufacturing plant in India within 3 years from the commencement and they have to use and comply with the local markets in India.[14]

The rules for electric vehicles in India

India’s electric vehicle regulation requires that all EVs be registered with the Regional transport office (RTO), similar to conventional vehicles. They must adhere to the central motor vehicle rules, 1989. Drivers need to have a valid driving license. Additionally, the government offers subsidies under the FAME India scheme (faster adoption and manufacture of hybrid and electric vehicles) aimed to promoting EV usages. Insurance is the mandatory for all EVs, importantly EV charging stations across India are expanding under various government and private initiatives, easing the transition towards electric mobility.[15]

Government strategies On Pandemic induced constrains:

Government relief packages during the Covid-19 pandemic have increased the fiscal deficit manifold. Considering the collateral damage to numerous sectors, especially labour-intensive ones and MSMEs, it is unfeasible for there to be large Electric Vehicle subsidies, especially considering the gestation lag in returns. Supply chain disruptions across the globe have caused supply crunches. The transport of lithium and other materials is restricted, causing a supply crunch. Moreover, income constraints because of reduced economic activity and unemployment shall reduce demand for vehicles in general. However, resumption of supply chain links and increase in income can be reasonably expected post the recession.

Policy recommendations by Governments[16]:

Awareness through a nationalistic lens: Information on the benefits of Electric Vehicles for the technological advancement, global Advancement with the welfare of socio-economic qualities, India has made a highlighted position and to make social segments.
Go-green media campaigns: there must be collaboration between the central and state government on a single campaign or multiple campaigns which includes social and cultural connections and values to consumers in concerned regions with the stated motive of national welfare.
Schemes for collaboration: Collaborative schemes with private sector enterprises for carrying out EV promotional activities for their employees and strategizing incentives for switching using nudge theory and other behavioural concepts.
Approaching to multinational and private companies: The government initiates many companies for infrastructure outlay and corporate manufacturing and investment plans in India. The government must ensure smooth transaction of working culture that gives successful initiations to the investors for expected demand of economy.

EV policy 2.O policy:

The Delhi government is set to unveil it’s 2.O policy for the promotion of Electric Vehicle through retro-Fitment Route. Electric retro -Fitment route means to convert Exiting patrol or diesel run vehicles into an electric vehicle. The process entails replacing the original internal combustion engine and associated components with an electric powertrain, enabling vehicles to run on clean energy sources.[17]

Electric Vehicle Retro-Fitment: To make retrofitting more accessible this policy is expected to offer subsidies or other incentives. The retrofit kits will require approval from designated testing agencies, as specified by regulations. Although expensive it will benefit the upscale vehicle in the long run. The forthcoming EV policy aims position the city as a model of clean and more sustainable urban transportation. [18]
The waive registration fees For electric vehicles: The Ministry of Transport and Highways has issued a draft notification dated on 27, 2021, further to amend the Central Motor Vehicles Rule, 1989, Proposing to exempt the Battery Operated Vehicles (BOV) From payment of fees For the purpose of issue or renewal of registration certificates, and assignment of new registration mark, this has been notifies to encourage E-mobility, the Ministry said it in a meeting. According to MORTH, this is aimed to encouraging e-mobility but it is a very small step.[19] The government of India reduced the GST on all EVs to 12% to 5% whereas a fuel run vehicle has 28% GST on it. No road tax in some states like Telangana for up to Rs. two lakh rupee vehicles.

FAME INDIA SCHEME

Faster adoption and manufacture of (hybrid And) electric vehicles (FAME)- I & II is currently India’s flagship scheme for promoting electric mobility. it was launched by DHI in 2015 currently it is in second stage of implementation, FAME-II Is being implemented for a period of three years effective from 1st April, 2019 with a budget allocation of ten thousand crore, which includes A spell over from fame one of Rs. 366 crore.

The Data by the Department of Heavy Industries revealed that Delhi had the highest number of public charging stations in the country at 1,845 while Karnataka has 706 and Maharashtra has 660 EV charging stations. In total India have 6586 charging stations all over the country. The Department of Heavy Industries has also sanctioned 2636 charging stations 62 cities across 26 states under FAME India scheme phase two. By now many more charging stations may have been put as esteem now India has 9,000 to 10,000 charging stations operating currently.

The government has launched two more incentives for faster adoption and manufacturing scheme for electric vehicles which have now run on their course successfully fame on the National Electric Mobility Mission plan 2020, is a national mission document providing the vision and road map for the faster adoption of electric vehicles and their manufacturing in the country. As part of this programme the Department Heavy industry formulated a scheme which is faster adoption and manufacturing hybrid and electric vehicles in India scheme in the year of 2015 to promote the manufacturing of electric vehicle and hybrid technology and to ensure sustainable growth of the same.[20]

Phase-I is the scheme initially Launched d for the period of two years, commencing from 1st April of 2015 which was subsequently extended from time to time and last extension was allowed up to 31st March 2019. The first Phase of FAME was implemented through four focus areas namely, (a) demand creation, (b) technology platform, (C) Pilot project and (d) Charging infrastructure. Market creation through demand intensives was aimed at incentivizing all vehicle segments that is two wheelers, three wheelers, light commercial vehicles and buses.

Phase-II of the FAME scheme with the outlay of rupees Ten crore, for a period of three years from 1st April 2019.[21] Out of total budgetary support about 86 percent of the fund has been allocated for the demand incentive to as to create demand for EVs in the country. this phase aims to aims to demand by way of supporting seven thousand e-busses, five lakh e-three wheelers Passenger cars including strong hybrid and ten lakh e-two wheelers.

However, depending upon the offtakes of different categories of EVs these numbers may vary as the provision has been made for inter and as well as inter segment wise fungible.

Subsidy: Phase II of the subsidy aims to support one million electric two wheelers during the tenure of the subsidy. The said number of registered vehicles will get a subsidy of Rs. 20,000 each from the government. Just like the last phase only the two wheelers that only can be cover an 80km distance on a single charge and can get a speed of at least 40km/hour are eligible for the scheme. In subsidising the purchase, the government is aiming to install 2700 charging stations across the country. It will include location such as metro station, hilly states, smart sites and even in highways.[22]

The FAME 2 subsidy amount in the beginning was Rs ten thousand per kilowatt hour (km/h) which the government later increased to Rs fifteen thousand per km/h subject to a maximum of 40 percent of the vehicle cost. however the government reduced the subsidy in next announcement and therefore this reduction of subsidies has resulted in Sharpe decline in the sale of EVs since the last few months benefits of consumers In the FAME 2 subsidy by the central government allows consumer to buy electric vehicles at a cheaper price this encourages consumers to shift towards electric vehicles over fuel powered vehicles This also allows them to Play their part in protecting the environment from pollution and encouraging reduced use of fossil fuels. Additionally several state government have introduced their own subsidy for Electricity vehicles which has sweeten the deal even further there may be other incentives in terms of interest free loans, road tax exemption Reduced or no registration fees etc.

Measures: Additionally the government has taken the following measures to impetus to Green Mobility further-

The Union Budget 2023-24 extended the customs duty exceptions to the import of capital goods and machinery required for the manufacture lithium-ion cells used for batteries and electric vehicles. [23]
GST on electric vehicles has been reduced to 12% to 5% on charger and charging stations for electric vehicles also been reduced. [24]
Both commercial as well as private Battery operated vehicles are given green license plates and are exempted from permit requirement.
Waiver on road tax on EVs, which in turn will help reduce the initial cost of EVs.[25]
To expand and strengthen the public Electric Vehicle Charging Infrastructure across the nation, the Ministry of power issued the revised consolidated guidelines and standards.

The guideline involves private players to install EV charging station. In the directions the Oil Marketing Companies have announced the setting up of Twenty two thousand EV charging stations in prominent cities and on National Highways across the country. It is expected that EV sales will overtake sales of conventional fuel vehicles in a few decades in two wheelers countries China it has already happened.

Conclusion

We have seen EV industry particularly in two-wheelers India has also gained significant momentum in past two years. There’s is no concrete law in regards to electric vehicles in Indian legal system, electric vehicles is controlled through the Motor Vehicles Act, but not have complete application in the judicial system. India is still under process of making more implementation on the progress of EVs. lawmakers still think whether there is need for separate ministry, but definitely there’s a need for a separate legislature because there are many bits of pieces of laws relating to EVs which are scattered Everywhere like motor vehicle Acts and more dealing with EV terms and policies, conclusionaly there is absolute need for a specific legislation which will deal with such matters where every type of problem relating to running of the electric vehicles, manufacturing and what are the permits licenses, what are the exemptions, whether any tax benefits available or not. These things are must need of every consumer and a better growth for market and more effective policies although it reduces the environmental degradation. The government should come up with policies and infrastructure to promote and regulate the EV charging stations and this require good investments for higher steps in India.

[1] Dristi IAS https://www.drishtiias.com/to-the-points/paper3/electric-vehicles-evs

[2] Definition of electric Vehicle https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-an-ev

[3] international energy Agency https://www.iea.org/energy-system/transport/electric-vehicles

[4] History of electric car https://government.economictimes.indiatimes.com/blog/past-present-future-of-electric-vehicles-advanced-battery-technology-is-key-to-success/111914709

[5] Britanica Thomas davenport https://www.britannica.com/biography/Thomas-Davenport

[6] History of electric vehicles wikipedia https://en.wikipedia.org/wiki/History_of_the_electric_vehicle

[7] Gaston plante Britanica https://www.britannica.com/biography/Gaston-Plante

[8] The history of electric vehicle https://www.energy.gov/articles/history-electric-car

[9]History of electric vehicle e mobility https://lionsmart.com/history-of-electric-vehicles/

[10] Nisaan leaf launched https://www.nissan-global.com/EN/STORIES/RELEASES/nissan-leaf-10years/

[11] Autolib launched https://fgvenergia.fgv.br/sites/fgvenergia.fgv.br/files/caderno_carros_eletricos-fgv-capa_ing_-_completo_-_rev2.pdf

[12] What is an EV https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-an-ev