The global research firm Climate and Sustainability Initiative (CSI) has launched its operations in India and unveiled its latest report, “India’s Auto Industry: Mapping the Course to Net Zero by 2070.” This comprehensive study outlines a roadmap for decarbonizing India’s automotive sector to align with the nation’s goal of achieving net-zero emissions by 2070. The transition is expected to spur economic growth, enhance the mobility industry, and foster a strong market for electric vehicles (EVs).
The report provides an in-depth analysis of the automobile sector’s decarbonization, detailing the required investments, anticipated benefits, and financial mechanisms needed for the transformation. It covers various vehicle categories, including two-wheelers (2Ws), three-wheelers (3Ws), cars, buses, and trucks.
Some of the key findings of the report include: Original Equipment Manufacturers (OEMs) will need to invest approximately USD 323 billion to produce electric vehicles (EVs) alongside current technologies, potentially generating an impressive USD 14.1 trillion in revenue by 2070. This transition could create a total market value exceeding USD 19.7 trillion by 2070, with cars making up 63% of this market and contributing nearly USD 15.5 trillion. Additionally, the shift in the automobile sector could yield USD 4.1 trillion in Goods and Services Tax (GST) revenue from 2020 to 2070. However, the report also highlights challenges, such as the need for USD 9.6 trillion in vehicle loans by 2070, which would increase auto loan volumes over 20-fold, and a projected annual battery demand of about 1,716 GWh by 2070. To achieve full domestic production, manufacturers will need to invest USD 196 billion by 2070.
The report emphasises the need for innovative financing solutions, such as first-loss guarantees for financial institutions and lines of credit for EVs, to support consumers across all sections of society. And also highlights the critical role of government support in this transition. To support the switch to EVs, regulators and policymakers will need to boost the financing available to the sector, and as a result, the auto loan portfolio will have to grow much faster than the overall banking sector. The Faster Adoption and Manufacturing of Electric and Hybrid Vehicles Phase II (FAME II) scheme, as well as its current successor, Electric Mobility Promotion Scheme (EMPS), since April 202 and various state-specific incentives have already spurred the growth of EV sales in India. However, there is a need for continued policy support, including favourable tax regimes and incentives for domestic battery production, which will be essential to sustain this momentum.
Vaibhav Pratap Singh, Executive Director, Climate and Sustainability Initiative (CSI) said, “The transition to a net-zero auto industry in India is not just an environmental imperative but also an economic opportunity of unprecedented scale. Our report illustrates that with the right investments and policy support, India can lead the global shift towards sustainable mobility while offering a scale for investments to pour in and create opportunities for the entire automotive ecosystem. The path to 2070 is ambitious but achievable, and it promises significant economic returns and technological advancements. We are committed to supporting this transition through innovative solutions and strategic collaborations.”
Thiru S. S. Sivasankar, Transport Minister, Government of Tamil Nadu further added, “The Indian economy is on a robust growth trajectory with a stabilising population, leading to a substantial rise in energy needs. This economic expansion correlates with increased per-capita income and urbanisation. As we advance, the demand for energy, especially in transportation for both passengers and freight, will surge. Our government is proactively incentivizing manufacturers and consumers to adopt clean energy technologies, fostering decarbonization. Under Chief Minister MK Stalin’s leadership, Tamil Nadu has positioned itself as India’s premier EV manufacturing hub and a leading renewable energy producer with over 16 GW of installed capacity. This progress supports the electrification of vehicular fleets through decarbonized electricity. The state has also attracted investment interests amounting to nearly Rs. 24,000 crore and generated employment for 48,000 individuals within the EV value chain.”
Originally Published in The Financial Express (Online)
