Air pollution garners significant media attention during winter, but it persists year-round.The causes of poor air quality in Indian cities are diverse. While episodic factors like farm fires, festivals, and unfavourable meteorological conditions contribute temporarily, the transportation sector emerges as a year-round offender. In a city like Delhi, motor vehicles are responsible for 40% of PM2.5, 80% of NOx, and 85% of CO emissions, making the sector a critical focus area for pollution mitigation.

To tackle this challenge, India must accelerate the transition to clean mobility options. Fortunately, 2024 has been a pivotal year for this transition, marked by three major national-level policy announcements that could potentially accelerate this shift:

Revision of CAFE Standards

In June 2024, the Bureau of Energy Efficiency (BEE) under the Ministry of Power announced Phases 3 and 4 of the Corporate Average Fuel Efficiency (CAFE) norms for light-duty vehicles, inviting public feedback.

CAFE regulations are designed to improve the average fuel efficiency of vehicles produced or sold in the country. Established in 2015, these standards for passenger cars were implemented in two phases starting from FY 2017-18 and FY 2022-23. Compliance is assessed annually at the corporate fleet level, considering factors such as average fuel consumption and certified CO₂ emissions.

These norms incorporate vehicle weight as smaller cars consume less fuel. Manufacturers’ compliance is evaluated using a formula based on CO₂ emissions, kerb weight, and sales data. Globally, stringent fuel efficiency norms have been key to advancing clean mobility solutions like Battery Electric Vehicles (BEVs).

Launch of the PM E-DRIVE Scheme

In September 2024, the Indian Government launched the Prime Minister Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) scheme, replacing the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) scheme.

Launched in April 2015, FAME aimed to promote the adoption of electric vehicles (EVs) to reduce vehicular emissions and fossil fuel dependency. The program evolved into FAME II in 2019 with a significantly increased allocation of ₹10,000 crore, focusing on financial incentives for EVs, particularly for public transport.

The ₹10,900 crore PM E-DRIVE scheme introduces ₹500 crore allocations for new segments like e-trucks and e-ambulances. Additionally, ₹2,000 crore has been earmarked for public charging infrastructure to cater to both light- and heavy-duty vehicles. The scheme prioritizes public and mass mobility, dedicating ₹4,391 crore to e-buses and ₹2,729 crore to two-wheelers (e-2Ws) and three-wheelers (e-3Ws).

Approval of the Payment Security Mechanism (PSM)

Public transport is the lifeline of cities. Globally, cities are leveraging private sector expertise to scale public transport operations, where public agencies handle planning and management while private operators manage operations and maintenance.

One persistent challenge in this arrangement has been the timely payment to private operators. To address this, the government announced the PM e-Bus Sewa-PSM Scheme in October 2024, with a budget of ₹3,435 crore to support the deployment of over 38,000 electric buses nationwide.

The scheme ensures timely payments to operators through a dedicated fund. In cases of payment default by public transport agencies, the implementing agency will disburse funds, which will later be recouped from the concerned public transport agency, state, or union territory.

Looking Ahead to 2025

While 2024 has laid the groundwork with these significant policy initiatives, the real momentum will be seen in 2025 during the implementation and finalisation phases. For example, the next phase of CAFE standards is expected to be finalized in 2025, while the guidelines for PM E-DRIVE and PSM are also anticipated early in the year.

With effective execution, these policies could serve as catalysts for India’s transition to cleaner, more sustainable transportation systems.