How Boycott China Will Affect India’s EV Industry Amidst The Coronavirus Pandemic

Vikrant K Aggarwal Rupesh Kumar Jun 13, 2020

The Indian EV industry currently has become the focal-point of auto sector as the COVID-19 pandemic and subsequent boycott China clamour hits it at a time when this sector was poised to take a positive growth following the Centre’s resolution to allow 30% share in E-mobility by 2030.

This makes the EV industry stand at the cross road of time. This is the best of time as the government aims to promote it but this also is the worst of time following outbreak of COVID-19 pandemic and boycott China call.

This is more so as the Indian EV sector is greatly dependent on China for the Lithium-ion run batteries (LIBs). Though we also import LIBs from Japan and Taiwan, China is the biggest supplier as of now.

As part of Atmanirbhar Bharat, the Indian EV players will certainly develop LIBs locally but the auto industry, as of now, has to depend on foreign supply chains for the Lithium-ion run batteries to allow the sector to grow during the period of COVID-19 pandemic.

Forthcoming Electronic Hub Push May Help EV Industry

Recently, the Union Minister for Communications, Electronics and IT, Ravi Shankar Prasad announced to create a big electronic hub in India as part of both “Make in India” and “Atmanirbhar Bharat” which certainly can offer a positive push to the EV sector.

The Centre will also give Rs. 50,000 crore incentives towards this. Those associated with EV can certainly benefit from it, in a major way, of course. It is more so as the COVID-19 pandemic though declining, is yet to be over and the EV industry really needed such incentives.

As the pandemic made the EV industry wake up the need of developing its own Made in India local supply chain for all critical parts including LIBs to be independent once for all, this announcement of Mr. Prasad is much welcomed.

A Thought on Need for Self-sufficiency on LIBs

Is it right time to split our head over the question of boycotting the foreign supply chain of LIBs during the pendency of pandemic COVID-19?

The answer to this question is an emphatic no as it will offer a rude blow to the EV industry because LIB-making facilities just cannot grow overnight. It needs time.

On the other hand, at this pandemic crisis phase, we need to play very cautiously to ensure that the growth rate of EV sector is not marred. Naturally, a status quo over the foreign supply chain can be the right decision. After the COVID-19 pandemic is over, we can concentrate on developing our own LIBs.

We know we require technology transfer or developing our own indigenous technology and provision of adequate and regular supply of lithium. As India does not have enough lithium reserve to manufacture EV batteries on a large industrial scale, it has to sources it from abroad, ideally from Bolivia or Chile.

Due to the pendency of pandemic, however, import from foreign countries may not be a smooth affair. On the other hand, LIBs are required. Hence, the issue of switching over to “Made in India” LIBs can be thought after the global economy returns to normalcy.

EV Industry Must Take A Cautious Tight-Rope Walk Now

According to the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME India) scheme, manufacturing the LIBs indigenously has been accorded top priority so that the country can have 30% share of vehicles in the form of EVs on-road by 2030.

It is time we act in the fashion of tight-rope walking!

At a crucial juncture when the E-vehicles poised for a major role in the Indian automobile sector with the potentiality to transform it, a hurriedly taken decision on LIBs can damage the industry.

It is in this backdrop that the announcement of the COVID-19 relief Economic stimulus package to the MSME sector as a whole brings some breathing relief for the EV industry. It is likely to help the EV industry to now initiate steps to grow self-dependent as far as the LIBs are concerned.

The NITI Aayog has said India will require 50 GWh of battery storage capacity for the next two-and-a-half years to support the projected growth in renewable energy and national Electric mobility target.

This opens up a new vista for the MSME sector and also make non-“Made in India” factor a reality for “Atmanirbhar Bharat”. Besides, the EV sector now holds the key to translate into reality the concept of “Act Local”.

The EV sector, however, has to be “Vocal” to “Act” with demanding for more benefits from the Centre and State governments to start manufacturing or at least assembling, the LIBs.

The Economic Stimulus announced by the Prime Minister and the Finance Minister certainly gives the EV sector the hope that the Centre would be much more liberal in providing easy term loans and tax waivers to help the auto industry “Act Local”. This may also encourage startup companies in this sector.

Vikrant K Aggarwal

Guest Author Vikrant K Aggarwal is Director and Co-founder at EVI Technologies. He is also an IIT- Delhi Alumnus. Vikrant closely worked with Enviro Group & Jaypee Group) power sector for almost 5 years.