India expects to attract $14 billion of investment over the next five years as it plans to offer fresh incentives to companies manufacturing electric vehicles (EV) as a part of the Auto Sector Scheme.

The new Automotive Sector Scheme has been under discussion since mid-2020. The plan envisages $8 billion of incentives for carmakers and suppliers over five years. The move is expected to drive large investment in the sector in the years to come. The automotive incentive scheme is part of India's broader $27 billion programme to attract manufacturers from China and Vietnam to capture a bigger share of the global supply chain and exports.

Companies will receive 4 to 7 percent government incentives on the eligible sale and export value of vehicles and components, but companies that manufacture electric vehicles and their components will receive an additional 2 percent cash back from the government as a "growth incentive" to promote electric mobility.

The dependency on electric vehicles is increasing day by day as India moves towards a sustainable future to cut down pollution and also the dependency on fuel as a natural resource.EVs have seen a resurgence due to technological developments, and an increased focus on renewable energy, and the potential reduction of transportation's impact on climate change and other environmental issues.

Project Drawdown is a nonprofit organization that helps the world reach the point where levels of greenhouse gases in the atmosphere stop climbing and start to steadily decline. It describes electric vehicles as one of the 100 best contemporary solutions for addressing climate change.

A pre-COVID analysis projected that Electric vehicles are expected to increase from 2 percent of the global share in 2016 to 22 percent in 2030.

In December 2019, close to $40 billion was invested in companies building solutions for the electric vehicles sector across the globe. India accounts for merely ~1.6% of this. Investment in Indian EV startups has soared from ~$20 million in 2017 to ~406 million so far in 2019.

Ather Energy has raised Rs 2,583 million ( $35 million) in VC Funding round from Flipkart's co-founder Sachin Bansal, and HeroMotoCorp which is the highest in 2020.

Other Indian EV companies that have raised funds in 2020 are BluSmart Ultraviolette Automotive Private, Welectric, Yulu, Euler Motors, Earth Energy EV, Etergo BV, Bestway, and Numocity Technologies.

Ola electric, Blive, Battery Smart, and ebike are the Indian EV startups that have raised funds in the last month. Ola alone has raised a fund of $300 million from Temasek, SoftBank, Tiger Global among others.

Ola Electric, the EV arm of ride-hailing giant Ola claims to be building the world’s largest two-wheeler manufacturing facility. The company claims that by 2022, its facility in Tamil Nadu will be ready to produce 10 million vehicles annually.

Elon Musk's Tesla Inc is all set to enter India while the competitors in India including Ford, Volkswagen, and India's Tata Motors, and Mahindra & Mahindra also have plans to invest billions of dollars in EVs to meet stricter global emissions regulations.

The move comes in as India is poised to take the global stage in EV. They join other well-funded Indian startups like Ather n Energy, US-based Triton, who have already rolled out their EV two-wheelers and four-wheelers or set up shop in India.

India's transport minister Nitin Gadkari said that he too drives an Electric Vehicle and calls people to shift to electric. He also said that 100 percent lithium-ion batteries, an essential component in EVs will be made in India, while the government also researches on other abundantly available materials like aluminum ion, sodium ion, steel ion, and zinc ion for batteries.

Finance Minister Nirmala Sitharaman has announced a tax subsidy for people who buy EVs in Union Budget 2019-20 which gives the push for the Indian Electric Vehicles mission.

“To make electric vehicles affordable to consumers, our government will provide (an) additional income tax deduction of Rs 1.5 lakh on the interest paid on loans taken to purchase electric vehicles. This amounts to a benefit of around Rs 2.5 lakh over the loan period to the taxpayers who take loans to purchase electric vehicles,” says, Nirmala Sitaraman.

The government has also launched the National Electric Mobility Mission Plan 2020 and also projects like Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) for widespread adoption of EVs.

May 2020, the Ministry of Heavy Industries and Public Enterprises (MHIPE) issued a notification to all the testing agencies under Faster Adoption and Manufacturing of Electric Vehicles in India (FAME II).

The notification covers the eligibility under the revised Phased Manufacturing Program (PMP) for xEV (generic name for electromotive vehicles such as hybrid electric vehicles, plug-in hybrid electric vehicles, and fuel-cell electric vehicles) parts.

PMP will be valid for five years until 2024 and promotes domestic production across the EV value chain. The notification specifies that all other parts and components other than the ones mentioned should be domestically manufactured and assembled.

Meanwhile, Asia's richest man Mukesh Ambani's company Reliance Industries has recently announced that it would make batteries for EVs.

RIL said it will further accelerate its new energy and new materials business towards its vision of clean and green energy development.