[Answered] The draft battery swapping policy has tremendous potential to create new economic opportunities for various stakeholders and the nation. Elaborate

Introduction: contextual introduction.
Body: Write in brief how the battery swapping policy will create new economic opportunities for various stakeholders Write some associated challenges. Also write some challenges.
Conclusion: Give a way forward.

Recently, Niti Aayog has prepared a draft battery swapping policy to offer incentives to electric vehicles (EVs) with swappable batteries, subsidies to companies manufacturing swappable batteries, a new battery-as-a-service business model and standards for interoperable batteries. Battery swapping is replacing a depleted battery with a fully charged one at a battery swapping station (BSS).

New economic opportunities:

  • Leveraging EV Market: The overall Indian EV market was pegged at USD 1,434.04 Billion in 2021 and is expected to grow to USD 15,397.19 Billion by 2027 at a CAGR of 47.09%.
  • Increase EV adoption: Batteries are the costliest part of EVs. It would lead to an increase in demand for EVs, especially for public transport and goods mobility.
  • Benefits to service providers: It would also be advantageous for fleet owners, food delivery, and other similar service providers. While they would have to incur operational charges, they would save substantially on capital expenditure while buying vehicles in bulk.
  • New business: The private sector will be encouraged to provide battery or energy as a service. It will create new avenues for companies to venture into the business of battery swapping.
  • Boost to start-ups: Battery swapping policy including interoperability could be a big booster for all the startups already working in this space.

Although the potential of battery swapping policy are huge but there are following areas of concerns that need to be addressed:

  • Supply chain constraints: It is largely due to unregulated mining practices for limited materials that go into battery manufacturing. Therefore, putting a greater strain on a limited pool of resources.
  • No uniform standard: It might be difficult to get the EV manufacturers to agree on interoperability which will not allow them to give their customers a strategic advantage in terms of superior range over their rivals.
  • At present, the GST on a separate battery is at 18 percent as opposed to on a battery sold with an EV, which attracts only 5 percent GST. While this will take out a significant cost from the vehicle and discourage to do business in the space of Battery as a Service (BAAS).

Due to nascent market dynamics, this policy lacks a constructive roadmap for setting up required infrastructure. For this, the private sector should be encouraged to develop business models for ‘battery or energy as a service’.

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