'To gain acceptance, EVs would need dedicated lanes'

By Amit Gupta

With the Union Budget around the corner, it is time to look at how the Central government can assist the growth of shared mobility and electric vehicles (EVs) in India. As I write, initiatives such as the National Electric Mobility Mission Plan (NEMMP)-2020 and Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) I and II are already helping our domestic e-mobility industry take off in the right direction.

In addition, along with the rising popularity of EVs, we also see an increase in the use of shared mobility platforms as a convenient and cost-effective transportation solution to 'first and last mile' connectivity issues. India's shared mobility market is one of the largest globally, with 3.5 million rides per day. In terms of absolute value, the shared mobility market was USD 1 billion in 2019 and is poised to grow at a compound annual growth rate (CAGR) of approximately 25-30 percent over the next five years.

Today, India stands at the crossroads, where shared mobility and EVs come together. In my view, the shared e-mobility start-up community has much to look forward to when the budget is announced in a couple of weeks. But to provide holistic support to shared e-mobility start-ups, I believe that the government will need to consider four key areas in Budget 2020.

Getting access to capital

Financing has been a significant concern for the EV industry as nationalized banks currently do not offer any specific scheme for EVs. As a result, getting debt funding for CapEx is not easy. Therefore, it is essential that the Centre creates a framework that makes capital available to EV start-ups. For instance, a loan guarantee scheme that encourages banks to lend to EV manufacturers and operators at interest rates similar to ICE driven vehicles would be a welcome measure. The need is for parity on lending terms with the conventional automobile sector. If these EV start-ups have to scale up, they need the support of the Central government. By identifying and supporting these start-ups, the government will be laying the foundation for this industry to grow.

Building supporting infrastructure

To complement the Centre's support, state governments can also adopt measures that build the required infrastructure to promote EV utilization. Incentives could include land allotment for charging infrastructure and mandating charging infrastructure in malls, housing societies, and office complexes and public parking places.

To gain greater acceptance, EVs would also need dedicated lanes. For this, footpaths and non-motorized transport (NMT) lanes must be created within 5 km of all metro stations under the Metro Rail Policy, 2017. It is also essential to have a dedicated and accessible parking space for shared mobility vehicles at all metro stations to enable multi-modal integration and first and last-mile connectivity. Further, a national policy for parking infrastructure for shared mobility is the need of the hour.

Making policy changes

State governments can also adopt policies that facilitate a permit-based Public Bicycle Sharing (PBS) system, as opposed to a tendering system. A PBS system would allow multiple players to offer their services instead of restricting the opportunity to a few. In addition, state governments must mandate municipal authorities to provide demarcated zones to EV players to facilitate public bike-sharing. Further, we have seen that there are agencies whose main business is outdoor advertising taking a license or winning tenders to run shared mobility services. Neither they have the capability nor intent to run such services. So advertisement rights must be delinked from PBS services to ensure PBS is the priority and not ad revenue.

Promoting mobility as a service using EVs

Presently, India's shared mobility platforms are mostly limited to internal combustion engines (ICEs). These engines cause as much as 25 percent of India’s pollution, second only to industrial pollution. The government must provide incentives to shared mobility platforms that purchase ‘low- speed’ EVs, including an upfront reduced purchase price on the low-speed EVs. Such measured will enable affordable and eco-friendly transportation options for the masses—helping start-ups scale up and promoting shared mobility across the country.

Shared e-mobility start-ups are also currently mandated to charge 18 percent GST on revenue. We request parity with GST chargeable to original equipment manufacturers on their EV revenue to 5 percent. Such a reduction will effectively reduce the price that consumers pay to commute using EVs in a shared environment.

Finally, EV shared mobility platforms face significant challenges in entering new markets, especially tier 2 cities. These organizations are unable to gauge market responses and anticipate business success. In these cases, we request state governments to create a Viability Gap Funding (VGF), which can be provided to start-ups looking to expand to tier 2 cities. With access to adequate funding, start-ups can conduct test runs for even three months to test the waters in a new environment and gauge the public response. Once a business model is deemed to be viable, start-ups can invest resources in expanding operations.

While measures have already been initiated to nurture the EV ecosystem, additional monetary incentives and policy changes are required to address the broader concerns that face the industry. I welcome new measures in Union Budget 2020 that continue to bridge this gap and nurture the shared e-mobility start-up ecosystem.

(The writer is the co-Founder & CEO, Yulu)