Incentivising public transportation rather than private electric vehicle (EV) production is a more viable path for energy transition and reduced carbon emissions in India as the latter is dependent on high amounts of imports from countries like China, the Economic Survey stated on Friday.
It mentioned that electric mobility makes economic sense in a country like India, which imports most of its oil and has abundant renewable energy and coal, but there are challenges.
"The import intensity of EV production – especially from countries with whom India has persistent and large trade deficits - is very high. The extent to which electric mobility is incentivised in the short run needs to keep this factor in mind," the Survey mentioned.
Indigenising the technology and raw materials for electric mobility, according to the Survey, is an urgent task.
"Finally and importantly, given India’s vast size and limited land availability, public transportation is a more efficient alternative for viable energy transition," it added.
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The EV industry is at a nascent stage in India. The EV penetration in the Indian two-wheeler market stands at about 5-6 per cent right now. Electric cars comprise just 2-3 per cent of total cars sales.
The manufacturing of an EV, relative to a conventional car, requires nearly six times more minerals to produce, most of which are utilised in producing the EV battery. This is an important consideration as many minerals crucial to EV manufacturing are scarcely available or processed in India while simultaneously being concentrated in very few countries, the Survey mentioned.
The Indian Ministry of Mines has analysed the 33 critical minerals vital to India’s economic security and found that 24 are currently at high risk of supply disruptions. China commands a significant share of critical mineral processing and production globally. Across key commodities such as Nickel, Cobalt, and Lithium, China alone is responsible for processing 65 per cent, 68 per cent and 60 per cent of the global output, respectively, it stated.
Similarly, in the case of rare earth minerals, China contributes to 63 per cent of global mining and 90 per cent of global processing output. Moreover, lithium-ion batteries will dominate other technologies for quite some time, and their demand is expected to grow at a compound annual growth rate of 23 per cent by 2030. The lack of viable alternative battery technologies reinforces China’s dominant position in lithium-ion batteries, the Survey noted.