A steep duty drop could rev up India’s EV market

livemint.com:

Tata Motors has done well in. Last year, the electric four-wheeler market clocked 33,000 units in sales. This year, that number is expected to more than double, a pace of growth that promises to bring economies of scale within the reach of dominant EV sellers.

What could give this story extra sparkle is some frisson at the upper-end as well, where luxury marques have begun going electric in line with their global conversion strategies. That the Centre might be ready to reduce its currently high levels of protection for our car market, even if just for EVs, should cue a broad policy relook at what works best. If our big goal is to move domestic sales rapidly from fossil-fuel guzzlers to cleaner vehicles, a subsidy spur is not enough.

EVs should attract switchovers primarily by virtue of low-cost production. Domestic industries that are shielded by steep import barriers, as our automobile industry broadly is, tend to have a higher cost base than the world average. In contrast, exposure to global rivalry, as barrier-free imports cause, would push domestic producers to turn globally competitive by cranking out better cars at lower prices to compete with every player on Earth.

While this might be too disruptive for our old-tech auto sector, a rapidly emerging segment like EVs whose cost dynamics differ in key ways could offer a clean slate for an open-market trial run. The fact that we have fairly low-priced EVs on our roads (as does China), coupled with a big discovery of lithium reserves that could translate into a battery advantage, suggests that a global edge could plausibly be achieved at an early stage of a worldwide transition. Can India be a global EV hub? It’s worth a try.