India’s Electricity Act is getting in the way of its grand electric-car plan

Image: Reuters/Abhishek Chinnappa
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The Narendra Modi government has set itself an ambitious target: 2030 onwards, no new cars sold in India will run on petrol or diesel. The first litmus test for this venture is the procurement of 10,000 electric cars (pdf) by state-owned Energy Efficiency Services (EESL) to replace government vehicles that run on conventional fuels.

On Sept. 29, 2017, EESL announced its plan to replace around 500,000 government cars with electric cars. The first phase of the plan was to press 500 such vehicles into service by November 2017. Two months past that deadline, only six cars have hit New Delhi’s streets.

The six Mahindra eVeritos, which can travel up to 130km on full charge, serve the newly-appointed members of the 15th Finance Commission. Another 100  such cars are expected to take to the streets in February. However, even this small number has brought the implementation problems into stark relief—particularly the challenge with charging stations.

Exicom Tele-systems, which won the initial contract from EESL to provide 250 electric charging stations in the first phase, has only installed between 80 and 90 AC (alternating current) facilities till now. And these have been installed only in government buildings like the Shram Shakti Bhawan, which houses India’s power ministry.

“Those charging stations are connected to the (electricity) metre of the respective ministry or department, and they pay for their own chargers. There is no violation of regulations,” Saurav Kumar, managing director of EESL, said at a meeting with journalists on Jan. 22.

The reason why charging stations, unlike petrol pumps, cannot be installed in public spaces is that India’s Electricity Act only allows Indian power distribution companies to sell electricity, explained Kanv Garg, director for electric mobility at advisory firm, EY.

“The current regulations do not allow private parties, or even government entities, to set up charging infrastructure. They should either be a deemed licensee, or they have to set it up as a public-private partnership with the state utilities,” Garg told Quartz.

With just a handful of charging stations—primarily alternating current chargers that take up to eight hours to fully charge electric sedans like the eVerito, and about 25-odd fast chargers, which charge in about 70 minutes—the EESL initiative is essentially an intra-city transport project, with electric vehicles that can travel up to a maximum distance of 130km in one go.

Clearly, India’s plans to frame a national electric vehicles policy won’t take off without an amendment to the Electricity Act.

“This (the limitations in the Act) I think, is a non-starter. The government needs to exempt electric vehicle charging from the Electricity Act. This is a major (amendment). Electric vehicle charging should be considered a sale of service, rather than resale of electricity, which is not allowed under the Act,” Garg said.

Laws must adapt quickly to make India more competitive in the electric vehicle space, said Deepesh Rathore, director at automotive advisory firm Emerging Markets Automotive Advisors. “The industry needs proper and rapid infrastructure creation. In the end, you are selling electric vehicles to an end consumer…(who) is not going to buy electric vehicles till the time he has the confidence that he can charge them,” Rathore told Quartz.

India’s electric vehicle market, though still at a nascent stage, has attracted the interest of established car makers, including Maruti Suzuki India and Tata Motors. Maruti is also working on electric passenger vehicles in partnership with Toyota. Meanwhile, having already put around Rs500 crore ($78.35 million) into the segment, Mahindra & Mahindra plans to invest another Rs3,500 crore over the next five years. And there is the German car-maker, Volkswagen, which is keeping a close watch, too.

India has a host of reasons to move towards electric mobility, the cutting of its fuel bill by around $60 billion being a crucial one. But, so far, the Modi government is yet to walk the talk.