The Climate and Sustainability Initiative (CSI), a global research firm committed to the pivotal task of decarbonizing the economies of Asia and Africa announced the launch of its India operations along with revealing its latest comprehensive report mapping the Indian auto industry. The report titled ‘India’s Auto Industry: Mapping the Course to Net Zero by 2070’ lays out a detailed roadmap for decarbonizing India’s auto sector, aligning with the nation’s commitment to achieving net-zero emissions by 2070. This transition, vital for combating climate change, is anticipated to generate substantial economic opportunities, driving growth in the mobility industry and creating a robust market for electric vehicles (EVs) and other sustainable transportation options.
The seminal report presents a meticulously detailed scenario for the automobile sector’s decarbonization, focusing on the necessary investments, potential gains, and the financial mechanisms required to support this transformation. The analysis spans various vehicular categories including two-wheelers (2Ws), three-wheelers (3Ws), cars, buses, and trucks. Some of the key findings of the report include:
- Need for Original Equipment Manufacturers (OEMs) to invest approximately USD 323 billion to produce EVs alongside existing technologies, which is expected to generate a staggering USD 14.1 trillion in revenue for OEMs by 2070
- The transition could further lead to an overall market creation exceeding USD 19.7 trillion by 2070, with cars accounting for 63% of this market, contributing nearly USD 15.5 trillion
- Furthermore, the automobile sector’s transition could potentially yield USD 4.1 trillion in Goods and Services Tax (GST) revenue from 2020 to 2070
- At the same time the report also discusses the challenges in the auto industry. For example, to achieve the above-mentioned transition, India will require vehicle loans worth USD 9.6 trillion by 2070, increasing the volume of auto loans to over 20 times
- The annual battery demand for EVs could increase to be around 1,716 GWh by 2070, and to achieve complete domestic production; manufacturers will have to invest USD 196 billion until 2070
According to Vaibhav Pratap Singh, Executive Director, Climate and Sustainability Initiative (CSI),”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, Hon’able Transport Minister, Government of Tamil Nadu further added, “The Indian economy is on a robust growth trajectory with a stabilizing population, leading to a substantial rise in energy needs. This economic expansion correlates with increased per-capita income and urbanization. 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 INR 24,000 crore and generated employment for 48,000 individuals within the EV value chain.”
Underscoring the significant financial barriers that need to be addressed to facilitate the transition, the report highlights 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.
Furthermore, the report also emphasizes 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.
“India’s Auto Industry: Mapping the Course to Net Zero by 2070” is a vital resource for policymakers, industry stakeholders, and financial institutions. It highlights one potential pathway for achieving net-zero emissions in the auto sector, highlighting the economic, environmental, and financial benefits of this transition.