India can cut oil imports through electric vehicle adoption

Source: The post India can cut oil imports through electric vehicle adoption has been created, based on the article “Betting on batteries, not barrels” published in “Businessline” on 20th August. India can cut oil imports through electric vehicle adoption.

UPSC Syllabus Topic: GS Paper 3- Infrastructure- Energy

Context: India’s transport depends on imported oil, straining the economy. In FY 2024–25, crude imports exceeded $130 billion. Price spikes and geopolitical shocks hit the current account, weaken the rupee, and raise household costs. The article argues for a decisive shift to EVs powered by solar and storage, enabled by policy.

For detailed information on Adoption of EVs: Challenges and Solutions read this article here

Oil-Driven Vulnerability

1. Import bill and dependence: Transport is the largest oil user, pushing import dependence near record highs. Each barrel adds recurring, volatile costs that India cannot control.
2. Macroeconomic shocks: Oil price spikes transmit quickly to the current account and exchange rate. They also inflate logistics costs and household budgets, worsening inflation.
3. Avoidable exposure: This vulnerability is not inevitable. Replacing barrels with batteries can localise energy, cut imports, and build domestic manufacturing strength.

Economics Have Flipped

1. Falling technology costs: Battery packs are about 90% cheaper than in 2010, reaching $115/kWh in 2024. Solar PV costs fell by a similar 90%, making new solar exceptionally cheap.
2. Efficiency and per-km costs: EV drivetrains are three to four times more efficient than engines. With solar firmed by storage for evening charging, per-km costs drop and inflationary pressure eases.
3. Longer battery lifetimes: LFP batteries now deliver around 5,000 cycles versus 1,000 a decade ago. The same rupee of capex buys far more lifetime kilometres.

Dependency, Reframed

1. Capital goods vs consumables: Oil is a consumable dependency bought monthly at volatile prices. Batteries and panels are capital goods, sourceable from multiple suppliers, buildable at home, and recyclable.
2. Import bill impact: Replacing one oil barrel with imported clean hardware costs roughly one-fifth. Even with imports, the overall energy import bill would fall by about 80%.
3. Domestic capacity and recycling: PLI-backed giga-factories, diversified sourcing, and recycling reduce risk. Recyclers can recover over 95% of battery metals at high purity, turning past imports into feedstock.

Why Intervention Is Essential

1. Market limits and coordination: Without clear signals, investment lags, infrastructure is slow, and risk perceptions persist. Policy must accelerate cost declines and coordinate supply chains at scale.
2. Lessons from China, India’s gap: China’s near-50% EV share in 2024 arose from mandates and planning. India’s electric-car share was about 2%, underscoring the need for targets and networks.
3. Bottlenecks and alignment: High first costs, fragmented charging standards, and material risks impede adoption. Strategic intervention must align demand creation with local supply capacity.

Freight First

1. Diesel-heavy segment focus: Long-haul trucks consume a disproportionate share of diesel. Prioritising electrification on the Golden Quadrilateral and port connectors yields outsized savings.
2. Corridor infrastructure and MCS: Deploy Megawatt Charging System depots delivering over 1 MW per charger. Use global standards to avoid vendor lock-in and enable rapid scaling.
3. Solar-plus-storage near highways: Highway-adjacent solar-storage plants tied to distribution grids can supply cheap, inflation-proof power. Paired with EV efficiency, they cut charging and per-km transport costs.

Financing, Security, and an Integrated Roadmap

1. Financing innovation lowers capex: Battery-leasing and battery-as-a-service reduce upfront costs for operators. Public tenders can buy “vehicle-kilometres,” extending successful city e-bus PPP models to freight.
2. Supply security and materials: Greater use of LFP and emerging sodium-ion reduces nickel and cobalt dependence. Invest in domestic anodes, cathodes, separators (including synthetic graphite).
3. Close the loop at scale: Recovered materials already reach 95–98% yields at battery-grade purity. Scaling under Extended Producer Responsibility will create a secure domestic resource base.
4. National plan and standards: Adopt a 2047 “no-oil transport” goal with interim ZEV milestones. Build MCS-ready hubs every 100–150 km, enable open-access PPAs for solar-storage, accelerate PLI disbursals, update battery-warranty standards, and coordinate power-market, charging, and logistics reforms. The payoff: cheaper transport, a stronger rupee, cleaner air, and vibrant manufacturing.

Question for practice:

Examine why policy intervention is essential for India’s shift to electric vehicles.