Union Budget 2021: Policies, regulations must be extended to farm-based EVs

Rural logistics is a critical link for the proper functioning of the agricultural supply chain. It serves the primary purpose of providing timely inputs to farms and delivery of agricultural output to consumption centres across the agri-food value chain. A robust and resilient functioning of rural logistics is important for India’s
food security and this was further realised during the COVID-19 crisis.

While there are multimodal transport systems, transportation of agricultural goods is primarily dependent on road transport facilities. However, it is characterised by high costs as both vehicle-operating costs and food quality maintenance costs across the supply chain should be considered. The dominance of small and marginal farmers in India makes these aspects even more critical.

The existing scenario can be improved rapidly by including disruptive low-cost innovations like passive cooling and electric mobility for improving the rural logistics scenario. These interventions can accelerate rural development while increasing farmers’ income and ensuring the availability of quality farm produce for direct consumption or processing in urban clusters as discussed below:

Electric vehicles (EVs): Eco-friendly EVs, coupled with an appropriate OPEX model, can mitigate several transportation challenges faced by farmers. The major challenges faced by farmers are:
• Expensive transit cost for small-sized lots from farm to market
• Limited access to vehicles for transportation of produce to markets during peak harvest seasons
• Limited scope of first and last-mile delivery to remote areas

Value proposition of EVs

• 50 percent cost savings in fuel as compared to internal combustion engines
• 20 percent cost savings in maintenance costs as compared to internal combustion engines
• Can operate in a hub-and-spoke model for transportation of produce to markets and retail selling
• Has the potential to enable cooperatives and farmer producer organisations (FPOs) to set up and manage first and last-mile operations with reduced carbon footprints at a much lower cost
• EVs can be charged at solar-based charging stations and installed within built advanced telematics for real-time tracking and management.

There have been rapid developments in policies, regulations and technologies related to India’s electric mobility ecosystem in recent years. The government prioritised promoting and manufacturing EVs on a mission-mode approach in 2011 which led to the launch of the National Mission for Electric Mobility (NMEM and subsequently the National Electric Mobility Mission Plan (NEMMP) 2020 in 2013, which envisaged the cumulative sale of EVs to reach 15–16 million units in India by 2020.

Further, the Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles (FAME) India scheme was launched in 2015 under the aegis of the NEMPP 2020 by the Department of Heavy Industries (DHI). The DHI supported the manufacturing of 2.78 lakh hybrid/EVs under the first phase of the FAME India scheme.

The scheme provided a significant thrust to the electric mobility sector in India, leading to national and state-level stakeholders taking actions that created a better environment for manufacturing and promoting hybrid/EVs in the country.

The policies currently focus on converting public transport such as commercial two-wheelers, cars and buses into EVs. In order to develop the agriculture sector, significant policies and regulations must be extended to farm-based EVs in national as well as local contexts.

It is encouraging to note that in recent years, EV innovation in India has been led by startups that have developed vehicles and charging/battery swapping ecosystems that cater to the unique needs of the Indian consumer. Hence, with the right push towards innovation, electric mobility and participation of large manufacturers can be prioritised for strengthening mainstream farm-based transport facilities and reducing overall costs and emissions.

Passive cooling technology can bring efficient cold chain infrastructure to the doorsteps of farmers and consumers. Most perishable produce like fruits and vegetables are highly wasted due to the lack of cold chain facilities from farms to consumption centres. The high cooling costs and limited access to cold chain infrastructure lead to extensive wastage across the value chain, especially for small and marginal farmers. Passive cooling technologies provide an efficient solution to this situation by drastically reducing the cost of cooling and thereby the cost of
logistics for reefer transport.

Passive cooling technologies are suited for multimodal transport and are equally suitable for small farmers who have smaller outputs, as well as large traders dealing in container volumes. Apart from reducing the cost of transport, the technologies provide other advantages for maintaining the quality of produce across the cold chain which can significantly enhance the realised profits for farmers.

These new and emerging technologies can make agriculture more profitable and sustainable for farmers. They also have the potential to generate employment in rural areas for local entrepreneurs and assist them in running the operating model by strengthening necessary infrastructure, equipment and network, and providing information and enabling services.

The author is Partner -Clean Energy and Kakra-leader, Food and Agriculture, PwC India

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