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POV: The role of policy makers in EV transitions towards making collective transport in India electric

Updated: Feb 8

In my previous post I discussed the influence of technological innovation in #energysector towards Indian intercity bus transport going electric through the use of #ElectricalVehicles (EV) and value addition through digitalization. The #europeancommission also recently communicated the goal to make urban buses electric by 2030. #Flixbus (discussed in the previous post) and a panel of firms from mobility sector discussed challenges and potential for fostering innovation with the #Europeancommission. The intercity bus service provider has recently launched its services in more than 40 cities in India.

The market players in India were anticipating more favourable conditions in the interim budget news on Feb 1, 2024. It is interim until the new government is decided in the election to take place this year. The role of policy makers in influencing the adoption of the #EVs thus becomes an interesting development to watch.

This post uses recent examples to illustrate such influences of policy makers. It does so in three sections that are discussed next. The context remains the individual and collective passenger road transport in India.

Electric Bus India

Source: Anuradha Jain

  • First, a brief overview of the two policies FAME-1 and FAME-II (Faster Adoption and Manufacturing of Hybrid and Electric’ vehicles) aimed at faster adoption of manufacturing and acceptance of #EVs. It shows that the policy had to be amended to achieve the intended adoption.

  • Secondly, key corrections during and after policy cycles illustrate the market's response to real-world difficulties. These responses partially follow the path but also lead to changes in policies.  

  • Thirdly, market actors expressed concerns and expectations, such as longer-term subsidies, for more favourable conditions. These were only partially fulfilled in the announced interim budget. In my view, established manufacturers may dominate the market. SMEs (small and medium enterprises) could benefit from incentives for building technical skills in installing, running and maintaining the charging stations.

For those new to the Indian notations, the exchange rate for Euro in INR (Indian Rupees) is briefly mentioned for the ease of reading

  • 10 lakhs = 1 million and I crore = 10 million

  • 1 Euro as of date is ca. 90 INR

  • INR 10 lakh is ca. 11,100 Euro and

  • INR 1 crore is ca. 1,11,000 Euro.

Overview of two FAME policies and the adjustments

The first two FAME policies (status End of year 2023), at the national level, focussed on mainly four goals.

  1. To romote the use hybrid and electric automobiles in India.

  2. To ensure the creation of #EVinfrastructure e.g. charging stations, swapping of batteries that would stabilize the use and further adoption of electric mobility.

  3. To boost the ongoing technological innovation and development in the #EVsector further, encourage #EV manufacturers, suppliers, and related providers to produce a greater number of mobiles locally.

  4. Based on the changing settings, ensure that conditions remain favourable for the transport sector transitioning towards higher sustainability.

The scope of both the policies was electric two-wheelers (e-2W), electric three-wheelers (e-3W), personal electric four-wheelers (e-4W), light commercial vehicles (LCV), and electric buses (e-buses).

Table 1 offers a brief overview on the two policies, several changes, including adjustments in targets and in subsidies that took place. The current FAME-II policy phases out by the end of March 2024.

Table 1: A brief overview on the two FAME polices in India.




i. Pilot programs, early incentives for electric and hybrid automobiless

ii. Focus on demand generation, technology platforms, & charging infrastructure

iii. Technology development

i. Consumer subsidies/demand incentives & tougher eligibility requirements for suppliers

ii. Extend presence of charging infrastructure (1).

iii. Promote local manufacturing of EV parts (2). Boost use of E-Buses (3).

iv. Accelerate adoption of EVs to reduce CO2 emissions.


1. April 2015 – 31. March 2019

1. April 2019-31. December 2022,

1. April 2022-31. March 2024 (4) 

Budget allocated

INR 895 crore (ca. 99.5 Mio. Euro)

INR 10,000 crore (ca. 1,110 Mio Euro)

Status (5)

Supported 2.8 lakh (0.28 Mio) with demand incentive, 425(5) buses started, 520 charging stations and infrastructure sanctioned

1.22 Mio units of EVs sold (6) (70% of planned target), 10,185 public charging stations available (7).

Note: 1: For a population of more than one million inhabitants, 2: such as lithium-ion batteries and power electronics. 3. To make collective transport electric. 4: The policy duration was extended. 5: electric and hybrid buses-6: Till Dec 25, 2023. 7: An estimated 1.32 Mio EV charging stations are required by 2030 to meet an estimated 106 Mio EV’s sold by that year (Confederation of Indian Industry)


Takeaway 1: The framework of regulations, subsidies and incentives established through the government policies, has shown success in influencing the market in certain aspects.

Takeaway 2: The policies, although a result of a detailed consultation process with stakeholders, require revision due to market reaction that may at times differ to the one planned/anticipated.

Key policy corrections in response to the changing settings

The role of the policy makers in policy implementation is to nudge the market including the consumers to induce and maintain competition in direction of the set goals. Several factors can influence the behaviour of the stakeholders in the EV ecosystem, including those unforeseen. These result in both, a more positive or sometimes a less desirable effect. Either way, the policy makers attempt to encourage or restrict the behaviour by making amendments in the current or future policies. This is crucial so as to not deter potential players in entering the market, that would otherwise slow down competition.

Using examples, we’ll look into the effects of FAME-I and FAME-II policy implementation, as per end of year 2023 i.e. shortly before FAME-II’s planned phase out per 31. March 2024.

Table 2 shows examples of positive effects and in Table 3 those resulting in not so positive behaviours are presented in a simplistic way. The EV transition, like most socio-technological changes, is complex and comprises several interrelated issues that have unclear boundaries. The examples serve as basis for understanding the factors that triggered desired/not so positive behaviour as lessons for the future.

Positive effects

To consider such effects, data was collected from different sources, and consolidated for three examples (see Table 2 below). Each of the examples is linked to a selected goal of the policy presented in the previous section.

Takeway 3: The implementation in policies can be supported by additional factors that create further favourable conditions for achieving the intended policy effects.

Table 2: Examples of results from policies, how these can be assessed and other factors possibly creating a positive influence.

Intended effect at the end of year 2023

Performance indicator to assess the effect

Other factors creating favourable conditions

i. Rise in consumer trust for adoption of EVs

Increase in EV sales, technology developments (1)

Incentivization through governments in other countries inculcated trust in Indian consumers

ii.  Shift of traditional manufacturers to the EV market

Increased market share of incumbent manufacturers (2)

Existing country wide service network that can be leveraged for EVs

iii. Higher level of competition through collaborations in industry (3) 

Increase in number of market entrants, new technological developments

Increased public awareness and interest, focus of firms on sustainability

Note: 1: e.g. in battery technology, 2: in conventional market 3: between firms for innovation charging infrastructure

The not so desirable effects

The intended effects however were at times hindered by what in view of policy makers was undesirable, respectively less compliant behaviour. E.g. of original equipment manufacturers (OEM) in availing benefits of the subsidies, but not confirming to the eligibility requirements for the subsidies.

Table 3 highlights two such cases. It presents the behaviour, the measures that policy makers implemented in this regard and the effect of these measures. But before, some background is required about the cases for better understanding. In the FAME II, the rule to benefit from incentives to produce EVs locally was not strictly complied to by some firms. The investigations, based on complaints, showed the firms used imported components for manufacturing EVs but still claimed subsidies (related to Phased Manufacturing Plan that are aimed at domestic manufacturing). Based on data collection, the low supply of resources e.g. in pandemic situation and the high demand to be fulfilled led to a shortage of components that possibly triggers such a reaction. Whether and how this behaviour could have been avoided, requires detailed study.

Regarding the second case, in an effort to show lower costs of the vehicles for remaining conformant to eligibility requirements, some firms charged customers separately for electrical chargers. These firms, on intervention, have also refunded the cost of chargers to their customers. To benefit from the subsidies, the chargers (and their cost) need to be an integral part of the vehicle.

Table 3: examples of undesirable behaviour, actions taken by the policy makers and the result of the action taken

Undesirable behaviour

Measures taken by policy makers

Possible effects

i.  Less strict compliance of rules by using imported components to ensure demand fulfilment while benefitting from subsidies that aimed at local manufacturing1

Delay in distribution of subsidies to OEMs

Consolidation of small and new market entrants due to financial dependence on subsidies.



i. Selling electrical chargers at additional cost to keep cost of EVs below the set threshold so as to benefit from incentives

Mandate firms to refund cost of chargers to customers

Possible hinderance in future growth for suppliers and manufacturers2

Note: 1: lack of sufficient local products, arising amongst others from pandemic situation 2: To avail the subsidy, parts of the vehicle and can't be charged separately

Source: Business standard

The influence of such policies on the consumers has been a mixed one. Whereas there has been decline of sales for some suppliers, others have continued to enjoy increased sales. This indicates, that the market behaviours cannot always be fully predicted.

What could be driving the businesses towards a non-compliant behaviour? The after effects of pandemic situation, resource shortage in manufacturing to keep up with the demand may have had influence in this regard. From the policy makers, the delayed payment of subsidies has led to consolidation of smaller market actors whose existence at an initial stage is dependent on such government support. This in turn can affect fair competition as smaller players may be pushed out of the market (author’s view).

Takeaway 4: Policy implementation is not a linear process; unforeseen situations can influence the effectiveness of a policy.

Takeaway 5: Adjustments in policies, as a process of learning, are made in effort to ensure speedier growth towards achieving the goals.

Takeaway 6: Measures are taken by policy makers based on ground condition during the policy implementation. These can again achieve the intended effect, but can also have adverse reactions.

Concerns, expectations and the interim budget

In light of the above, what should be expected to come up after completion of FAME-II? The discussion below is based on views from stakeholders in the EV ecosystem. Key stakeholders of such an ecosystem are many, some of whom are illustrated in Figure 1 below. This brief analysis has focussed more on consumer, policy makers, manufacturing and EV charging (those marked in dotted lines are not discussed for the sake of simplicity).

EV Ecosystem
EV Ecosystem

Figure 1: EV Ecosystem (Author's depiction, based on extending EV ecosystem. Digitalization is a part of activities e.g. manufacturing, charging but also consumers (e.g. booking platforms)

Source: Electric mobility policy framework of housing and urban affairs,

The policies have supported in breaking several barriers, some earlier issues from FAME-1 persist in FAME-II, stand in way to set a faster pace towards the set goals. The market, based on its experience, has voiced its opinions/expectations with regards to reaching the intended goal.

Some key issues are briefly highlighted below.

  • Consumer’s concern about performance of EVs (range anxiety): The battery endurance to manage to the next charging station/destination or reliable power supply at charging stations may slow consumers from adopting EVs .

  • Non-harmonized policies of states: This can lead to policy fragmentation that may hinder the speed to achieve the intended effect.

  • Higher costs: The cost of acquiring an EV without incentives is higher than a conventional vehicle. As well as their cost per unit to be able to break-even.

  • Extent of EV penetration: Charging infrastructure in tier 3 cities (population size 20000-50,000) must increase if travelling must go electric.

In addition, the conflicting geopolitical trends may need a delicate balancing act for the government. There is tension between the nationalistic focus of countries to produce components locally and bilateral cooperation between that can boost technology development in the #EVsector.

Examples of expectations relate to deeper cooperation between stakeholders in the EV ecosystem such as research, industry and government is considered crucial. Next higher level of standardization and interoperability between the EV systems is considered necessary. The expectation is for more budgetary support in digitalization to improve and optimize vehicle and battery life, battery management etc. that could drive efficiency, differentiation in services and therefore new opportunities for market players in increasing their revenue.

In sum, for a consistent growth in the EV industry, the expectation is for a stable long-term regulatory framework. For e.g. continuing with incentives, prioritizing B2B customer segments and fleets as can be observed in green initiative of firms.

What next…

The good news is that interim budget 2024 communicated on 1st Feb 2024 will focus on E-buses, expansion of EV infrastructure in public transport networks, and support to entrepreneurs in capabilities development in manufacturing and maintaining these. In addition, the concession in duty levied for importing lithium-ion cells is extended to September 2024 for boosting local EV manufacturing. There is also focus on pushing the renewable energy e.g. the solar power sector. The hopes for an additional FAME-III policy of ca. 10,000 crores however did not materialize. Instead, the FAME-II policy is extended up to the year 2025 but the budget is slashed by ca. 55%.

In this regard, Amazon’s aim is to add 10,000 EVs to its fleet (by 2025), Zomato’s to electrify 100% of its delivery fleet (by 2030), and Uber’s aim to add 25,000 EVs (by 2026). In addition, the recent news of #Flix offering in over 40 cities is indicative for setting up of new charging infrastructure and services; this may be taken as a signal that the policy makers expect the market to organize itself hence a gradual reduction in the national budget (author’s view).

Takeaway 7: The policies provide a legal framework to induce and maintain competition, the interest of different stakeholders in the ecosystem is reflected in the policies.

Takeaway 8: Stakeholders in time of challenges collaborate to solve issues that arise in implementation to achieve a common set goal e.g. the net zero target.

Takeaway 9: Several other factors possibly play a role in policy changes, e.g. the upcoming elections may result in governments giving attention to policies that may create more support for being (re)elected. And/or their assumption that the markets can organize itself in certain aspects in the long term.


In this brief analysis the role of policy makers, on the basis of selected examples we see that whereas policies can nudge actors towards an intended societal goal, real world problems on the ground call for changes in policies.

The cycle of interaction between the policy makers and the markets involves several dynamic changes. Some issues will be solved new ones may arise. E.g. ensuring rapid growth of renewables to cover the demand of electricity, dealing with congestions, challenges in maintenance due to pollution (dust), skill development etc.

Detailed data must be collected to understand the transition of EVs, changes in its ecosystem and how it transforms, in this case, the future of collective transportation in India.

Do you have views you would like to add/share on this post? What discussions on freight platforms would you find helpful? You can write to me here. More to continue in coming days!

Data collection: The data collected is from November 2023 and updated till 04. February 2024.

*These are author's personal views. The data collection is based on the public sources available on the internet. The author takes no guarantees for this information.




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