From UPSC perspective, the following things are important :
Prelims level : Lithium ion battery
Mains level : Paper 3- Adoption of e-vehicles and challenges
Article highlight India’s preparedness for the faster adoption of electric vehicles and steps taken by the government in this direction.
Why electric mobility matters for India
- It is important for India because such vehicles are sustainable and profitable in the long term.
- Reducing dependence on crude oil will save the government money, reduce carbon emissions, and build domestic energy independence.
- India’s transition to electric vehicles will allow us to fine-tune our infrastructure.
- This will also influence India’s foreign policy as our energy security dependence will shift from West Asia to Latin America.
- India imported 228.6 MT of crude oil worth $120 billion in 2018–19, which made it the third-largest oil importer in the world in terms of value.
- Under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles and its updated (Fame 2) version, the government has allocated $1.3 billion in incentives.
- A proposal for a $4.6 billion subsidy for battery makers has also been proposed by the NITI Aayog.
- These policies are embedded with the vision to have 30% electric vehicles plying the roads by 2030.
Developing domestic battery manufacturing capacity
- At present, India’s lithium-ion battery demand is fulfilled by imports from China, Vietnam, and Hong Kong.
- In the last two years, India’s lithium imports have tripled from $384 mn to $1.2 bn.
- With its policy intervention to support battery manufacturers by supplying lithium and cobalt, this industry is more likely to grow domestically to support India’s goal to switch to electric mobility.
- In 2019, NALCO, Hindustan Copper Limited (HCL) and Mineral Exploration Corporation Ltd (MECL) formally signed a joint venture agreement to form Khanij Bidesh India Limited (KABIL) to scout for strategic mineral assets like lithium and cobalt abroad for commercial use and for supplying to meet the domestic requirement for battery manufacturers.
- Developing domestic battery manufacturing capacity may fundamentally change India’s relationship with resource-rich Latin America as the government plans to buy overseas lithium reserves.
- In Latin America, most of the production comes from Argentina, Chile, and Bolivia which holds about 80% of the explored lithium of the world.
- Currently, India’s biggest trading partners in Latin America are Brazil, Mexico, and Venezuela, and majority of trade is concentrated on crude oil which includes 14%-20% of India’s total crude oil imports.
- This may soon shift to lithium and cobalt.
The Indian government’s initiation to take the front seat in electric mobility and preemptive action to send a high-level delegation to have a precise understanding of the availability of lithium and possibilities of joint ventures will supply domestic markets and drive international markets.