Thrilled at the prospect of getting a government subsidy, Govind Mundhe, a farmer from Solapur in the western Indian state of Maharashtra, put down a deposit for an e-bike in August 2022. He soon realized, however, that the two-wheeler he planned to buy — a Delta Sakura sold by a local manufacturer — was not eligible for tax breaks. So, Mundhe applied for bank loans. He was then told the low-speed electric vehicle did not qualify for such loans, and his applications were rejected.
Eventually, he was forced to pay the entire price of 90,000 rupees (around $1,100) out of his own pocket.
Mundhe’s ordeal is just one example of the many challenges Indians face if they wish to buy affordable EVs. Rest of World spoke to 25 EV owners in the country, 15 of whom said they had never received any of the subsidies promised by the government since 2019. Five were not even aware such subsidies existed.
“Not all vehicles get government subsidies and now some governments are withdrawing subsidies on EVs,” Sujoy Chourasia, who runs the EV technology aggregator firm eOxigen Automotive, told Rest of World. “Bank loans are available for high-speed EVs and the brands that are well-known. Otherwise, customers have to buy with cash or buy with personal loans. The poor charging infrastructure adds to the woes of customers.”
India has been promoting the adoption of EVs for many years now, with a slew of initiatives announced to encourage their purchase. The government has also been setting several lofty targets — some that have already been missed — to move away from the polluting internal combustion engines.
In April 2019, the central government launched the second phase of its Faster Adoption and Manufacturing of Electric Vehicles in India scheme (FAME II). It offers upfront incentives on the purchase of EVs and for setting up charging infrastructure. The same year, the Phased Manufacturing Programme was announced to promote local manufacturing of EVs. The government also introduced the National Mission on Transformative Mobility and Battery Storage to promote clean, connected, and shared mobility. The state governments of Delhi, Maharashtra, Gujarat, and Assam offer their own subsidies for the purchase of EVs.
Most of these schemes are misplaced and don’t solve real-world problems, EV experts told Rest of World. For example, the much-hyped FAME II initiative offers a subsidy only on EVs made with 50% locally manufactured components. And the maximum discount is capped at 40% of the vehicle’s price.
It’s hard to build an EV that has 50% locally made components, according to Balaji K, an EV consultant who runs NayaGaadi, an initiative to popularize electric vehicles in rural India. “Automobile makers in India have always imported major components, such as battery and battery components,” he told Rest of World. “Most of these products are sourced from China.”
Companies have been using illegal means to access these subsidies, Balaji noted. “Some automakers have started importing parts via shell companies that are registered in India, and then purchasing [the parts] from these [shell] companies,” he said, citing the recent tax raids on leading EV makers like Hero Electric and Okinawa.
“Lithium cells, an important component of batteries, are not [widely] produced in India and are imported [mostly from China],” the owner of a local EV manufacturing company told Rest of World, requesting anonymity as he fears repercussions for publicly criticizing government schemes. “Currently, manufacturers get all components of the bike and assemble them.” The Ministry of Heavy Industries, which runs FAME II, did not respond to Rest of World’s questions about the recent updates to the scheme.
The Indian government needs to tweak these policies if it intends to meet its target of 1.56 million subsidized EVs by March 2024, Balaji said. The initial deadline was March 2022, but only 742,272 EVs had received the benefits by then.
Indian banks, for their part, have shown support for the government’s EV push. Rest of World reached out to five banks — State Bank of India, HDFC, ICICI, Union Bank of India, and IDFC First — and learned that while they offer loans for purchasing EVs, these are limited to four-wheelers and some high-powered electric two-wheelers.
Around 40% of the EVs on Indian roads are two-wheelers, and most of them are low-speed bikes that don’t require registration with the Regional Transport Office, said Chourasia of eOxigen Automotive. “These vehicles are not eligible for bank loans as they don’t have number plates. Insurance companies don’t offer them insurance,” he said.
“I enquired at State Bank of India [and] Punjab National Bank, but a loan for EV was not available. Finally, I bought the bike [with] cash,” Amogh Dhamale, a 35-year-old social activist from Pune, told Rest of World. Dhamale’s Ather e-bike cost him 153,000 rupees ($1,872).
The lack of options has led some EV buyers to take loans from non-banking financial companies with high interest rates — going up to 36% as compared to the 24% charged by banks on vehicle loans. “I bought a TVS two-wheeler EV by taking a loan from Shriram Finance as it was available at the showroom,” Satish Mane, a Pune-based lawyer, told Rest of World. “The process was easier and the paperwork was less.”
“Incentives have not benefited every customer in the same way,” Soumyadeep Kundu, an EV researcher at the Indian Institute of Management in Kozhikode, told Rest of World. “Three-wheeler customers got [better] benefits than four-wheeler adopters, [who] have not benefited to that extent.” Kundu noted that not all states have benefited to the same degree either — northeastern states lag behind “Basically, [the FAME II] scheme is focused on the demand side rather than development infrastructure like charging stations,” he said.
India has only 5,254 public charging stations for the more than 1.3 million EVs registered in the country. This means most EV owners end up charging their vehicles at home where the source of power is thermal or hydro. As a result, the EV’s purpose — to reduce the user’s carbon footprint, also emphasized by the Indian government — is defeated.
“I can charge my bike at my home only,” Mundhe said. “Electricity goes [off] many times as ours is a rural area where power cuts are common. There is no public charging station in my town.”
In the long term, owning an EV in India is very expensive, Nilesh Chittur, an EV owner from Pune, told Rest of World. “Our [apartment complex] charges a commercial rate of 9 rupees [around 10 cents] per unit [as opposed to] green energy charged at 3–4 rupees per unit,” Chittur said. “How can we afford to have EVs?”
He added that his apartment complex has four charging points for the more than 10 EVs owned by residents. “We have to be in line to charge vehicles and that is so inconvenient,” Chittur said. “I don’t even know whether there is a public charging station [within] 4–5 kilometers near my house.”
Reporting for this story was supported by Earth Journalism Network.