Union Budget 2022: India’s electric mobility future is on the precipice. It can either continue to transition with reinvigorated momentum, inviting the world to take part in a nascent industry in one of the world’s largest markets
The budget announcement is perhaps the one annual event that allows any government in power to showcase its forward vision for the country’s economic and social future. The delivery, tonality, and content of the annual budget speech have the ability to spur, invite, detract or discourage economic growth and sectoral health. The inclusion or exclusion of certain sectors can be enough to signal to the national and international economy the intent of the current government. either doubling down on potential sectors or simply segueing away from what may be ‘oh-so-last-year’.
More simplistically, the budget is the opportunity to present the calculations based on the government’s understanding of the best allocation of resources to ensure that the country’s economic and social goals are achieved. Its budgetary allocations or lack thereof are the expression of the government’s position and an indication of where the GOI intends to invest, purely from a government point of view.
From the industry point of view, signaling the government’s position the sectoral budgetary allocations have huge implications on the future growth of different sectors. The inclusion or exclusion of sectors in the budget can have rippling effects across the spectrum and across the supply chain. The budget’s impact on the industry is so profound that without it specifically being called out, an industry can lose the steam it may desperately need.
The best example of such a profound impact could be electric mobility. Prime Minister Narendra Modi’s successful trip to Glasgow, which announced India’s ambitious net-zero goal of 2070, has once again put the country on the global climate change stage. A developing country, with burgeoning energy, consumption and transportation demands, agreeing to cut its emissions to zero in just 50 years, has signaled India’s seriousness of commitment and intent. To make it happen, India has to keep up with what it started and double down on those sectors that can help achieve this goal. Budget 2022-23 provides the perfect opportunity.
Electric mobility has been enjoying the sunshine so far. The government has been ‘aggressive’ on the transition towards electric mobility and sustainable transportation and this has translated into the explosive growth of the electric mobility industry in the last year alone. The sharp focus of the industry in bringing new and innovative products to the market, expanding charging infrastructure, and greening and localising the supply chain are all outcomes of government support in the previous years.
The electric mobility industry is at that pre-adolescent stage. It needs encouragement and support to mature so that it can stand, walk, run by itself. Pull this support away at this time, and the industry, which has the potential to establish itself as the one sector India has both a head start and potential of fulfilling “atmanirbhar bharat”, faces the danger of going back to a slow crawl. Budgetary provisions are squarely the signal that the industry needs to gain momentum.
There have been numerous occasions in the past, where a certain industry, touted in one budget for its growth outlook has lost its momentum, because of the exclusion or an understated mention in the next. Former Finance Minister Arun Jaitley provided a massive push for infrastructure in 2017, but by 2018, the lack of re-emphasis on the sector, disappointed the industry. While infrastructure will always be a sector that is inviting, its sheen has faded in the last few years.
This is not to say sectoral growth comes to a standstill. Rather, lack of budgetary push, signals a lack of government importance, especially for those sectors still in their nascent growth phase. These sectors do not then generate the kind of excitement that is needed to involve private, public and foreign investment at a globally enticing level. So, if the government’s realisation in the last few years on the viability of the electric and sustainable mobility sector as a potential advantage for India is true, then this year, the Finance Minister must double down on electric mobility in a big way.
The second reason for doing so is also in the signal it will send to the world and to investors searching for the next market. The emphasis on electric mobility by the government in the last few years and the subsequent growth in the sector has signaled to the world that India is keenly exploring the viability of this sector. A re-emphasis in this year’s budget will indicate that this is not just an exploratory sector for the country. But in fact, an industry India wants to truly develop. The reiteration of the government’s vision, till the point that the industry is on auto-pilot, will be key and the budget will be the perfect opportunity to start this reiteration.
It will also allow India to show that it is serious about its ambitious 50-year target. For us to achieve the goals set out by the Prime Minister in Glasgow, India can ill-afford to go at it by itself. India’s focus at the moment must remain to provide the basic needs for its vast population, most of whom are unfazed by the larger climate question, especially if it interferes with basic economic upward mobility.
Thus, India will need outside assistance in the form of technology and investment to ensure that the transition towards net zero is as undisruptive as it possibly can be. The transition would need to ensure that the government continues to meet its basic commitments to its constituents and lets someone else pick up the baton of this transition towards our climate change goals, which will require behavioural and aspirational change that private industry has become so adept at inducing.
India’s electric mobility future is on the precipice. It can either continue to transition with reinvigorated momentum, inviting the world to take part in a nascent industry in one of the world’s largest markets or like other sectors before it, slip into the background and allow some other market to take the advantage. For the sector and the economy to ensure that it follows the former, the signals the Government of India provides in this budget will be of paramount importance.
The author is the Executive Director of Ola Mobility Institute. Views expressed here are personal.