Asia Economics Blog

Co-author: T Stanzin
 
The automobile industry is at the center of the global climate transition. With road transport accounting for roughly one-fifth of worldwide CO₂ emissions, stringent emission standards in major markets like Europe and the US are pushing manufacturers to rethink vehicle technologies. Electric mobility, alternative fuels, and stricter efficiency norms have become core industrial strategy. With that, worldwide sales of electric vehicles surpassed 17 million units in 2024, an increase of 25% over the previous year.

India is positioning itself seriously within the shift toward cleaner mobility. At policy level, emission standards have been progressively tightened and industrial policies such as the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme and the Production-Linked Incentive (PLI) programme have aligned climate objectives with industrial development goals.

Co-Author: Madan Dhanora

“Need to focus on 5 things to bring India back on growth path – Intent, Inclusion, Investment, Infrastructure and Innovation,” Prime Minister Narendra Modi said while delivering the inaugural address at the Confederation of Indian Industry Annual Session 2020 – “Getting Growth Back”. Among the 5 I’s, we focus on innovation in the private sector which is stalling in India. As per the Department of Science and Technology, only 42% of total R&D spending was by the private sector during 2016-17, while in developed economies like the United States and another emerging economy, China, a larger share of R&D spending comes from business enterprises – upwards of 60-70% of total R&D expenditure in each. The contribution of 42% in India, though not on par with international magnitudes, has increased considerably from 19% in 2001-02. This increase may be attributable to liberalization and other policy initiatives to stimulate innovation including reforms in intellectual property rights.