Intro: This week at Socio-economic Voices Explore the transformative impact of India's electric vehicle (EV) market on its economy in this exclusive interview with Sameer Aggarwal, Founder & CEO, Revfin. Delve into the upsurge of job creation and investments, the role of financial technology in facilitating Electrical Vehicles’ adoption, and how policy changes are shaping the market. Speaking to senior journalist Mahima Sharma at Indiastat, he shares how EVs are poised to reduce oil imports and enhance trade balance; what are the strategies for trade diversification and shares insights into innovative financial models and technology solutions driving EV adoption. Also, learn how EVs are expected to contribute to India's GDP growth and navigate environmental concerns related to battery disposal. Take a read...

MS: How do you see the growth of the electric vehicle (EV) market impacting India's economy, particularly in terms of job creation and investments?

SA: The growth trajectory of India's electric vehicle (EV) market is poised to deliver transformative impacts on the nation's economy. As we surge towards the 2030 deadline for complete EV adoption, the ripple effects will resonate across sectors. Job creation, a key metric of economic vitality, will experience an upsurge. With estimations indicating that EV adoption could generate around 20 million jobs by 2030, this sector will be a formidable engine of employment growth. These jobs will span from research and development to manufacturing, charging infrastructure deployment, and skilled technical positions, fostering a diverse and robust employment landscape.

Furthermore, this growth presents a substantial magnet for investments. The Indian EV sector's rising attractiveness is underlined by the impressive $1.66 billion raised by EV startups in 2022, marking a 117% YoY increase. This infusion of capital underscores investor confidence in our potential to lead the global transition to electric mobility. These investments will not only bolster EV manufacturing but also catalyze ancillary industries like battery manufacturing, charging infrastructure, and renewable energy generation, diversifying and strengthening our economic foundation.

MS: What role does FinTech play in facilitating the financing and adoption of EVs in India, and how has it contributed to the overall economic landscape of the nation? Secondly, the latest discontinuation of subsidies has greatly impacted the EV market in India. What's your take on it and how must the policies be further looked at?

SA: In the journey towards EV adoption, financial technology (FinTech) is a pivotal enabler, helping reshape the financial landscape of the EV sector. This technology-driven disruption facilitates affordable financing options that are instrumental in accelerating EV adoption. Through flexible payment plans, innovative battery leasing models, and pay-as-you-go frameworks, FinTech solutions dismantle the financial barriers that have historically hindered EV adoption. By bridging the affordability gap, these solutions ensure that EVs become attainable to a wider spectrum of consumers, fostering a vibrant and inclusive market.

Government subsidies have also been instrumental, particularly in incentivizing public transport to transition to EVs. While the recent reduction in incentives from 40% to 15% under the FAME-II scheme has sparked discussions, this transition signals a shift towards a more sustainable and self-reliant growth trajectory. The role of subsidies should evolve from being the primary driver to a supplementary catalyst. Our ideal path forward is to foster an environment where quality, innovation, and cost-effectiveness become the primary factors driving adoption, aligning with the 'Make in India' initiative.

Answering the second part of your question, the recent discontinuation of subsidies has indeed sparked concerns within the EV market. However, this shift reflects a transition towards industry self-sufficiency and sustainable growth. As per government estimates, the sales figures did experience fluctuations in the following two months soon after reduction in subsidies, compared to the preceding period. However, it's worth noting that sales rebounded in July, exceeding 54,000 units as opposed to around 46,000 units in June. This trend is poised to gain momentum as time progresses. While subsidies have provided a crucial initial impetus, the sector now stands at a juncture where it can pivot towards a more market-driven approach. The focus should be on nurturing indigenous innovation, technology transfer, and localized manufacturing. Companies have been developing proprietary technologies and R&D initiatives to enhance the products’ experience and performance of EVs.

Policies need to be holistic, emphasizing R&D investment, charging infrastructure augmentation, and indigenous battery manufacturing. Government incentives should incentivize not just vehicle purchase but also auxiliary sectors like charging solutions and battery technology. Collaborative efforts between the government, industry, and FinTech players can drive affordability and innovation, ensuring India emerges as a global hub for sustainable mobility.

MS: Can you highlight any key policy incentives or regulations in India that have influenced the EV market's growth and its potential impact on trade dynamics? What extra push will be needed in the coming decade?

SA: India's EV market growth is underpinned by visionary policy incentives that shape the landscape. The Faster Adoption and Manufacturing of Hybrid and Electric vehicles (FAME) scheme, extended till 2024, and the Production Linked Incentive (PLI) scheme have been transformative. They create an environment conducive to both manufacturing and consumer adoption. In the first-half of the current year 2023, the sector has experienced consistent sales, averaging 1 lac-units each month according to estimates. This indicates a favorable shift in consumer perception towards the advantages of owning an EV. Furthermore, the government's commitment to becoming carbon neutral by 2070 has elevated the EV sector to a strategic priority, bolstering investor confidence and driving innovation.

However, a more comprehensive approach is essential. Strengthening charging infrastructure, a cornerstone of the EV ecosystem, requires concerted efforts. Standardizing regulations, interoperability, and charging protocols across regions will facilitate seamless trade and drive cross-border collaborations. A dedicated focus on enhancing battery technology, recycling infrastructure, and research and development will be instrumental in maintaining our global competitiveness.

MS: From an economic perspective, how do you envision the shift towards EVs influencing India's energy infrastructure and trade balance, especially in terms of reduced oil imports?

SA: The shift towards EVs heralds a transformative phase for India's energy landscape. As EV adoption accelerates, we anticipate a significant reduction in oil imports, which currently contribute substantially to India's trade deficit. This pivotal transition promises to bolster our trade balance, fortifying our foreign exchange reserves and enhancing economic stability.

This seismic shift, however, necessitates a strategic energy infrastructure upgrade. The surge in electricity demand due to charging requirements requires meticulous planning, with renewable energy integration being the linchpin of success. By synergizing EV charging with renewable energy generation, India can mitigate environmental impacts while fostering a sustainable energy ecosystem.

MS: As India aims to become a manufacturing hub for EVs, what measures are being taken to enhance the competitiveness of Indian products in the global market? And how is financial technology aiding this endeavour?

SA: India's aspiration to become a global manufacturing hub for EVs necessitates a multi-pronged approach. We are focusing on localized manufacturing, driven by schemes like the PLI, which enhance our competitiveness. Collaborations with international partners for technology transfer and skill development further augment our manufacturing capabilities, ensuring global quality standards.

Financial technology plays a strategic role in this journey. By offering innovative financing options, such as battery leasing and pay-as-you-go models, FinTech democratizes access to EV ownership. Moreover, FinTech facilitates seamless payments for charging infrastructure, enhancing user experience. This holistic approach strengthens our global appeal by offering a convergence of affordability, innovation, and convenience.

MS: From a macroeconomic perspective, how do you anticipate the widespread adoption of EVs influencing India's GDP growth and overall economic stability over the next decade? Also, EVs battery's disposal is a big environmental concern. How should India look into this amid its Net Zero Emission Targets?

SA: The widespread adoption of EVs is poised to exert a transformative influence on India's macroeconomic landscape. With estimations pointing towards a potential contribution of $206 billion to GDP by 2030, the EV market is primed to become a significant driver of economic growth. This substantial growth will span across manufacturing, technology, and infrastructure development, catalyzing an economic ecosystem that nurtures innovation, job creation, and sustainability.

The ripple effects of this transition will extend to reduced oil imports, enhancing trade balance, and fortifying our foreign exchange reserves. The holistic economic impact of EV adoption aligns harmoniously with India's vision of prosperity, self-reliance, and a sustainable future.

Further, significant initiatives at the government level in terms of regulations, and by companies on their part to address environmental concerns surrounding EV batteries’ post end-of-life management are being taken. Policy measures not only focus on promoting the cause of EV adoption, they take a comprehensive view – an ecosystem approach, which includes charging infrastructure, battery swapping & charging stations, battery waste recycling, etc., within a holistic sustainability mission. The Bureau of Indian Standards (BIS) has set industry standards for EV batteries encompassing safety and performance. The Battery Waste Management Rules, which is based on the concept of Extended Producer Responsibility (EPR), outlines proper battery collection, recycling and disposal, encompassing EV batteries for the related companies.

Repurposing Batteries: Considering these batteries typically last for 8-10 years, depending on their usage, they still contain significant residual capacity with amounts of critical battery materials. This is where the role of repurposing comes in for the batteries that can be used for alternate applications, such as augmenting renewable energy sources – windmills or solar while increasing grid flexibility, energy storage and operating economics. Thus, maximizing battery usage to its optimum levels, and ensuring viable Net-Zero transition.

The FAME scheme also provides a progressive framework for EVs, among other aspects, and supports battery recycling and infrastructure development. Also, with the rise of EVs as an option for transport growing, so are niche companies which are vertically focused on battery recycling are also mushrooming. These efforts underline India's commitment to mitigating the environmental impact of EV batteries as it pursues sustainable mobility solutions.

MS: Can you provide insights into how financial solutions and technology aid in managing the complex logistics and supply chain networks involved in the global trade of EVs and their components?

SA: Financial solutions and technology have emerged as critical navigators in the complex global trade of EVs. The implementation of blockchain technology ensures transparent and secure transactions, crucial for tracking components' origins and authenticity. Digital payment platforms and supply chain management software streamline transactions, enabling real-time tracking and optimization of inventory management. This technological synergy expedites global trade, ensuring timely deliveries and reducing operational intricacies. The result is an efficient, interconnected supply chain that underpins the seamless global movement of EVs and their components.

MS: In terms of financing and investment, what trends do you foresee in terms of venture capital, foreign direct investment, and public-private partnerships within the Indian EV ecosystem?

SA: The Indian EV ecosystem is poised for a dynamic phase of financing and investment. Venture capital will continue to flow into EV startups, fueling innovation and technology development. Foreign direct investment will be directed towards manufacturing facilities, aligned with India's 'Atma Nirbhar Bharat' initiative. Public-private partnerships will crystallize around charging infrastructure and collaborative research initiatives, propelling EV adoption and technological advancement.

These trends collectively paint a picture of robust growth, innovation, and collaboration, positioning India as a formidable contender in the global EV landscape.

MS: In terms of trade diversification, what strategies should India consider to leverage its EV expertise and foster new economic partnerships on the global stage?

SA: India's burgeoning EV expertise presents a strategic opportunity for trade diversification and global partnerships. Emphasizing technology transfer, skill development, and collaborative research and development with international partners will be pivotal. Setting and adhering to stringent quality standards will underscore our commitment to excellence, enhancing our credibility on the global stage. By leveraging our EV prowess, India can forge new economic partnerships, capitalizing on our potential to contribute substantially to the global EV revolution.

MS: Could you elaborate on any further innovative financial models or technology solutions that have emerged to address the unique economic challenges of scaling up EV adoption in India and participating in global trade?

SA: Innovative financial models are emerging as game-changers in scaling up EV adoption. Battery-as-a- Service and dynamic pricing for charging infrastructure address the affordability conundrum. Pay-as-you- go models and peer-to-peer lending platforms revolutionize EV ownership, making it more inclusive. Technology-driven logistics solutions streamline global trade by optimizing supply chain management and ensuring secure transactions.

This confluence of financial innovation and technology is instrumental in surmounting the economic challenges of scaling up EV adoption, transforming them into opportunities for sustainable growth.

About Sameer Aggarwal

An IIT alumnus, Sameer is the founder of Revfin Services, a digital consumer lending platform in India that focuses on financially excluded and underserved populations, aiming to provide access to finance for employment and entrepreneurship. Sameer had set up EMFAI, Electric Mobility Financiers Association of India with the vision of expediting the adoption of electric vehicles and he worked very closely with Niti Aayog, World Bank and SIDBI to revolutionize financing of EVs and support SDG 13 of Climate Action. Sameer also worked with Niti Aayog for finalizing the EV financing report and he is also a member of Niti Ayog Committee for Battery Swapping. He's also a Board member at Aristo Securities Private Limited, an RBI-regulated NBFC. In the past Sameer also held leadership roles in banking and consumer lending, primarily at HSBC in the UK, gaining expertise in credit risk management and profitability. He has received several awards including an NBFC industry Emerging Leader Award in 2019.

About the Interviewer

Mahima Sharma is a Senior Journalist based in Delhi NCR. She has been in the field of TV, Print & Online Journalism since 2005 and previously an additional three years in the allied media. In her span of work she has been associated with CNN-News18, ANI - Asian News International (A collaboration with Reuters), Voice of India, Hindustan Times and various other top media brands of their times. In recent times, she has diversified her work as a Digital Media Marketing Consultant & Content Strategist as well. Since March 2022, she is also an Entrepreneurship Education Mentor at Women Will - An Entrepreneurship Program by Google in Collaboration with SHEROES. Mahima can be reached at media@indiastat.com

Disclaimer : The opinions expressed within this interview are the personal opinions of the interviewed protagonist. The facts & statistics, the work profile details of the protagonist and the opinions appearing in the answers do not reflect the views of Indiastat or the Journalist. Indiastat or the Journalist do not hold any responsibility or liability for the same.