What Delhi’s EV Policy gets right?

On 07th August 2020, the Chief Minister of Delhi Mr. Arvind Kejriwal formally announced the launch of Delhi’s EV policy. The policy had already been approved by the Cabinet in December 2019 after several rounds of discussions that had commenced in 2018. Most public policy experts always state that a Policy is as good as its implementation. While this statement rings true, the Government of Delhi definitely needs to be commended for a well thought out, rounded policy considering the timings of the announcement, the objectives that it seeks to achieve and the methods that it proposes to achieve the policy objectives.

Timing of the Policy: To begin with, Delhi’s EV Policy couldn’t have come soon enough. According to the latest “World Air Quality Report” by IQAir, 6 of the world’s 10 most polluted cities are in India and that Delhi has the worst air quality for any capital city. A study by University of Chicago in 2018 also went on to say that the average Delhi resident’s life expectancy declined by 9.4 years thanks to air pollution. Considering the fact that winter will soon arrive in the next few months and stubble burning likely to commence soon, the timing couldn’t have been more perfect. The COVID-19 lockdown and the discussions around a clean environment would also help this policy’s cause in terms of generating traction in the mind space of all stakeholders engaged in providing clean mobility solutions.

Objectives of the Policy : As far as the objectives are concerned, the Policy clearly states that it intends to tackle air pollution caused by the transportation sector and by 2024, the target is to ensure that 25% of the new vehicle registrations across all categories are EVs. In addition to this, the policy has an economic dimension and hopes to generate new jobs such as those related to driving, servicing etc. in the EV ecosystem.

Key Points of Policy

First and foremost, the benefits that will be provided under this policy will be in addition to the incentives that are being currently provided by the Central Government under FAME II. Additional financial incentives are more likely to encourage early adopters to consider an EV over their Internal Combustion Engine (ICE) counterparts by bridging the exiting price gap between them.

Direct Purchase Incentives: A purchase incentive of up to Rs 30,000 has been envisioned for 2w, e-autos, e-rickshaws, e-carts and e- goods carriers. In addition to these incentives the Government is prepared to give an incentive of up to Rs 1.5 lakh per car for the first 1000 electric cars. Road Tax and Registration fee exemption across all categories of EVs is further expected to reduce the price differential between EVs and their ICE counterparts.

Concessional Finance: An option of availing concessional loans with a 5% interest subvention for the purchase of EVs has also been provided to boost EV off take. In addition the policy states that delivery service providers (eg. food delivery, e-commerce, logistics providers and couriers etc) who commit to the target of achieving 50% EV fleets by Mar’23 and 100% EV fleet by Mar’2025 shall be eligible for concessional financing from Delhi Finance Corporation.

Technology-Agnostic Approach: The policy has not favored any particular battery chemistry. Additionally, the subsidies and incentives have been designed for both fixed battery as well as swappable battery solutions.

Focus on more Clean Passenger-Kilometers: The financial incentives announced have factored in Delhi’s transportation and vehicular profile and hence accorded greater priority to 2-wheelers,3-wheelers, & shared mobility options like public transport buses. With 2-wheelers accounting for nearly two-thirds of new vehicle registrations, it makes sense to target this segment from a pollution control standpoint. At the present juncture, the sticker price of an EV after receiving FAME II subsidy may be still high and may deter prospective private buyers going for an EV option. So in order to counter this, the policy also targets the auto, e-rickshaw, service delivery and goods carriers for whom the total cost of ownership and running costs are important metrics for their overall business viability and profitability. As far as buses are concerned, Government plans to ensure that at least 50% of the new buses being acquired are electric starting with the induction of 1000 electric buses by 2020. The Government’s intention is to subsidize more clean passenger-kilometers and not just blindly focus on subsidizing EVs irrespective of its end use.

Charging Infrastructure: No EV policy is complete without an effective road map on the Charging Infrastructure ecosystem. While most of the charging is likely to occur at homes or at workplaces, the presence of an adequate number of public charging stations plays a significant role in boosting EV adoption through increased visibility and also in many ways alleviates “Range anxiety” of end users. The Government has announced that within the next one year it plans to set-up 200 charging stations in Delhi with the long term vision of ensuring that an EV charging station is available within 3 KM of travel from anywhere in Delhi. In addition, the policy provides for concessional electricity tariff for which will play a pivotal role from an economic view point to boost EV adoption at least for commercial operations.

Financing of the Scheme: The Policy has provided an outline on how it intends to fund this scheme and has adopted the “Feebate” Model where in “fees” imposed on not so clean mobility solutions are deployed to offer “rebates” on clean mobility solutions. A non-lap-sable “State EV fund” that will be financed primarily by the Pollution Cess, Road Tax, Congestion Fee and the Environment Compensation Charge is definitely welcome. The policy has also indicated the Government’s intention to disincentivize diesel

Scrapping Incentive: While the Ministry of Road Transport and Highways is yet to finalize its scrapping policy, the Delhi Government has gone ahead and announced scrapping incentives as part of the policy. It has however, given a caveat, that these incentives will be given only if there is evidence of a matching contribution by the dealer or OEM and confirmation of scrapping and de-registration of old ICE vehicle. In some ways, this announcement can act as a behavioural nudge for other State governments to announce similar incentives and this can possibly give further impetus to the development of an organised auto-scrapping ecosystem.

Skill Development Perspective: The Government plans to impart vocational training at its World Class Skill Centres (WCSC) to help train a range of personnel in the EV ecosystem such as EV service mechanics, charging station operators etc. Anticipating the disruptive potential of a new EV ecosystem, it also intends to conduct re-training courses for ICE mechanics who wish to be trained in EV servicing and repair.

Institutional Mechanism: A dedicated State EV Board and an State EV Cell have been planned to regulate, implement and monitor the policy. Such an institutional mechanism with dedicated personnel and systems are requisite to ensure the timely and effective implementation of such a policy.

While the success of the policy depends on how well it is implemented, it would be fair to say that Delhi’s EV policy is welcome for it does tick the right check boxes. The Delhi Government should now faithfully proceed with implementing the policy in a time-bound manner. It should diligently work with all the stakeholders across the value chain to ensure that the benefits envisioned by the policy reach the intended beneficiaries efficiently and effectively. A successful EV ecosystem in the nation’s capital city can provide just the right shot in the arm for e-mobility solutions across the nation.

Neither a capitalist nor a communist just an issue-ist|| ex-Policy Analyst with NITI Aayog. Interested in public policy & international affairs