In the next three to five years alone, as per estimates, the share of modern retail will increase to about 30 per cent with the share of unorganised retail coming down to about 70 per cent. Modern retail hinges on streamlined logistics and supply chains and already there is a noticeable uptick in freight vehicles. To make matters more concerning, the gap between unorganised and modern retail is expected to shrink further, when the Indian retail market is estimated to reach USD 2 trillion by 2032. Our roads will then see millions of additional freight vehicles including 2 and 3 wheelers in the last mile and larger commercial vehicles in the first and mid mile logistics chain.
Need for state mandates
These vehicles significantly contribute to greenhouse gas emissions. Companies and governments are cognizant of this challenge, but current growth and prosperity considerations have outweighed mid to long term sustainability goals. This is exactly where state level mandates play a crucial role. Delhi has recently introduced the Fleet Aggregators Scheme in 2023 which mandates time bound transition of fleets including e-commerce, logistics and ride-hailing services to electric by 2030. Several states like Maharashtra and Punjab have targets for EV transition for last mile fleets. Even internationally there is significant traction around this with the California Clean Trucks rule mandating phase out of ICE medium and heavy trucks by 2035. This has been replicated by 6 other American states too.
Financial and technological benefits
Increased EV adoption in commercial fleets will further spur economic growth by creating jobs in green technology sectors, from EV manufacturing to charging infrastructure development. Also for those in the gig economy, operating electric vehicles reduces expenses due to lower total cost of ownership. State mandates can accelerate overall technological advancements and smooth out challenges. It will encourage automakers and tech companies to innovate, leading to more efficient and cost-effective solutions helping maintain competitiveness in the global market.
Mandates must come with right Ecosystem
The mandates must be supported by a strong policy and implementation ecosystem. This is necessary to ensure smooth EV adoption that is aided through both infrastructure and also financial incentives, such as subsidies and grants. Delhi’s policy reflects this with the extensive charging infrastructure projects and policy mechanisms in place, before introducing the Delhi Fleet Aggregators Scheme in 2023. On the other hand, Maharashtra which introduced an ambitious target of 25 per cent EV in delivery fleets by 2025 had to roll back citing lack of sufficient charging infrastructure.
Mandates help accelerate the creation of an ecosystem. For instance, announcing that a certain percentage of fleets have to be electric will encourage investments in grid upgrades and smart grid technologies to support increased electricity demand. If this can be further tilted towards improving capacity for renewable energy, it would be an added benefit.
While many states in India have referenced fleets transition in their EV policies, proactive action for implementation is limited. To truly bring change on the ground and tackle growing transport emission due to modern retail, governments must ensure strong mandates for transition alongside working actively with stakeholders to see that implementation is effective.
