Reinventing India : PIC Policy Paper #43

The Future of Mobility and Sustainability

November 2022

Ravi Pandit and Kaustubh Pathak

• Ravi Pandit is a founder trustee of Pune International Centre. He is the co-founder and chairman of KPIT Technologies Ltd. He also serves on the board of Finolex Cables Ltd. Pandit was a member of the Government of India’s Core-Group on Automotive Research Program Committee (CAR) and was on the Department of Technology’s Technology Development Board.
•  Kaustubh Pathak works in the field of clean and sustainable mobility. Currently, he is working on development of technologies for generation of Hydrogen from biomass. Kaustubh also has expertise in technology assessment. He has worked on evaluation of technologies from diverse fields to assess their commercial viability.

The progress of humanity is inextricably linked to the progress of human mobility — from the tree to the ground, from Africa to the rest of the world, from the bottom of the sea and into space, human progress has been reflected in our mobility.

Mobility is also the lifeline of any economy, and the mobility industry is one of the highest contributors to GDP and to employment. The way the human body depends on blood vessels, in the same way, several industries depend on the mobility industry.

Unfortunately, the mobility sector is a major consumer of fossil fuels and hence one of the highest contributors to environmental damage. In India, the transportation sector accounts for a third of the pollution in the country.

World over, mobility is in the state of unprecedented transformation. Let us look at how these changes are likely to happen because this will define the future of mobility in our $5 trillion economy.

Mobility enables the transportation of goods and people from one place to another. With the advancement in the field of telecommunication, the need for transformation of people is being revisited globally, especially after the Covid-19 pandemic. Most of the service industry, including IT, banking, consulting, etc., are now finding it convenient to function online and are allowing people to work from home. With reliable, high-speed internet, people are preferring meeting virtually than meeting in-person. The development of technology is opening up new dimensions for people to communicate. The evolution of mobile phones over the last 10 years has changed the way we live and communicate today, virtually shrinking the world into the palm of a hand. And this is just the beginning—with concepts like the metaverse becoming a reality, people will get an immersive experience in virtual reality where they can interact and collaborate in 3D digital avatars. As Microsoft’s CEO Satya Nadella mentioned while speaking at Microsoft Ignite 2021 conference, ‘It is no longer just looking at a camera view of a factory floor, you can be on the floor. It’s no longer just video conferencing with colleagues, you can be with them in the same room. It’s no longer just playing a game with friends; you can be in the game with them.’² Such life-like communication experiences will totally transform the need for mobility.

In a similar fashion, advancements in technology will transform the mobility of goods significantly. Concepts like city-based vertical vegetable farms will reduce the need for transportation of farm produce to a great extent. Technology like 3D printing will allow manufacturing of finished products near the point of use. This will increase the efficiency of goods transport significantly. The movement towards localization will promote the localized economy by giving preference to use of locally produced goods over the ones imported from distant places. This can be seen from the fact that local mobile producers in India and China have taken massive market share by moving towards regional supply chains that produce locally for local markets. This is partly because heavy things are more expensive to move, so localized production of large products, such as vehicles, fabrications, etc., is much more cost-effective.³ It is much more effective to transport an electron than a molecule or matter, so a strong telecommunication network can support a reduction in the mobility of people and goods. It follows that growing the size of the economy fivefold will not require a corresponding growth of the mobility sector.

While the need for mobility will be reduced, new technologies will also make mobility more efficient, in environmental and economical terms. A variety of transport modes such as drones, air taxies, bullet trains and hyperloop capsules, which were considered only a part of science fiction, are now becoming a reality. With the successful flights of SpaceX, Virgin Galactic and Blue Origin into space, the era of commercial space travel has begun. Though this is still futuristic for India today, the country will have a big role to play in terms of research, technology development and manufacturing. Many Indian companies have already initiated their work in this domain. Agnikul Cosmos, Skyroot Aerospace, Dhruva Space, SatSure and Pixxel are some of the Indian start-ups working in this domain.4 Around 60 start-ups have registered with ISRO since ‘unlocking’ of the Indian space sector.⁵ Flying taxis or urban air mobility (UAM) vehicles is another domain that will redefine urban mobility. Morgan Stanley, a US investment company, predicted that the global UAM market will grow at CAGR of 30 per cent, reaching $1.5 trillion by 2040.⁶ This is sure to affect city planning, building architecture and transport infrastructure development in the near future.

On-road mobility is also going through a transformation years after Henry Ford introduced Model T to the world. The new revolution is being called ‘CASE’, which is an acronym for Connected, Autonomous, Shared and Electric. The new mobility will be largely electric, completely connected, significantly autonomous and will be increasingly used in shared format.

Introduction: 

Mobility In India

India has one of the largest mobility systems in the world, mainly comprising road transport followed by railways. Lack of adequate public transportation in the country is one of the significant reasons for the large growth in privately owned vehicles in the past decade, causing frequent traffic congestions in many cities. This has contributed to an increase in the pollution levels of the country. As per the World Air Quality Report published by IQAir, India is home to 35 of the world’s 50 most polluted cities.
With the growth of the mobility sector, oil import of the country is increasing. In FY 2020–21 (before the Covid-19 pandemic), India imported ~220 metric tonne crude oil worth
$102 billion.⁸ Most of the fuel demand comes from the mobility sector. According to a report submitted to the Petroleum Planning and Analysis Cell (PPAC), 70 per cent of diesel and 99.6 per cent petrol is consumed by the mobility sector alone.

The ways in which the mobility sector is currently functioning in the country are not sustainable, both from the perspective of environment as well as national economy. There is, hence, a need to make a transformational change in the Indian mobility sector. Luckily, this need has not gone unnoticed by our government and the policymakers. More than 20 cities in the country are building metro rail systems for rapid public transportation. Many cities in India have started using battery electric buses. With tax incentives and special schemes like FAME (Faster Adoption and Manufacturing of [Hybrid &] Electric Vehicles in India) and FAME-2, use of electric mobility is encouraged even in case of two-wheelers, three-wheelers and cars. On 15 August 2021, the government launched Hydrogen Mission for the country, which will play a significant role in promoting fuel cell vehicles in the country. We are seeing the dawn of a new world.

The government is also keeping pace with the new developmental trends in the mobility sector. Indian Railways is working on the Mumbai–Ahmedabad high-speed railway (bullet train) project. The high-speed train will operate at a speed of 320 km/hr, reducing the travel time from seven to less than three hours. The first phase of the project is expected to be completed by 2026. The government also plans to have a bullet train service connecting Delhi and Varanasi by 2030. Another futuristic concept that the country is currently working on is the hyperloop. It is basically a sealed tube or system of tubes with low air pressure through which a pod may travel substantially free of air resistance or friction. This will allow passengers to travel probably at the speed of an airplane at the cost of road travel. The project is expected to be ready for demonstration within the next three years.

A high-speed transportation network will reduce travel time and provide better connectivity, thereby giving boost to business, tourism and overall development in a region.

It is predicted that globally, the industry will see more than 100,000 drones deployed for commercial use every year over the next four years.¹⁰ The drones will be used for surveillance (in military, agriculture, traffic monitoring, etc.), aerial photography, supply of essentials and medicals, disaster management, etc. Considering this, the Ministry of Civil Aviation in India recently announced the Drone Rules 2021, which will provide a massive boost for private investment, R&D, innovation in technology development, testing, training and manufacturing. This reflects the intent of the government to facilitate growth of this industry in the country.

India will also be one of the biggest users of drones. With the growth in this space, there will be high demand for trained and certified drone pilots in the near future.

Clearly, the mobility sector is in for a transformational change as we commence our journey for the $5 trillion economy.

Making The Transformational Change

The Three Shifts in Urban Mobility Urban mobility covers a range of modes of transport, including walking on foot, bicycles, mechanical two-wheelers, shared three- wheelers, personal cars, shared transport such as buses, metros, railways and commercial vehicles.

We believe that the movement will be largely from (i) diesel/petrol to electric, (ii) from personal to shared, and (iii) from physical movement to digital movement. These three big shifts will dominate the future of urban mobility. This will be because there will be a significant groundswell for pollution-free, non-congested transportation funded through private as well as public investment.

We believe that most of the electric transportation will run on batteries. In the next five to 10 years, the incremental vehicle population in the country will be almost 30 per cent battery electric.11 In our opinion, the current battery technologies are changing by the day. New chemistries such as sodium, new technologies such as solid state, and new manufacturing methodologies will all make battery electric vehicles cheaper than the polluting diesel/petrol vehicles.

Despite the current blip caused by Covid-19, people will move towards shared transport rather than personally owned transport. Cab services such as Ola and Uber are going to bring an increasingly larger share of vehicles on the road. Autonomous vehicles, especially on fixed routes, will make vehicle sharing even more attractive. A large part of goods delivery and last-mile connectivity will be shared.

The third dimension of change will be from physical to digital. As we see in most of the service industries, people are working from home because of Covid-19. But it would be wrong to think that we will go back to our old ways when Covid-19 becomes history. According to the survey conducted by real estate firm CBRE South Asia Private Limited, over 73 per cent of firms in India are planning hybrid working arrangements.¹² Also, in case of the US, it is observed that the organizations are more inclined towards the work from home culture.

STEP: An Enabling Framework
Radical yet sustainable transformational change requires a systematic model. An earlier publication from two of the contributors to the book, From Leapfrogging to Pole-Vaulting,¹⁴ postulates that transformational change involves the application of four levers to make the transformation radical yet sustainable. The four levers are STEP, as detailed below, along with the public action required for each.

•  Social engagement: No transformation will last if it is not accepted by people at large. It is, thus, necessary to convince people to be a part of transformation by spreading knowledge about the impact of the transformation.
  The three big shifts are largely born out of deep societal changes. Awareness about the ill effects of pollution on health has triggered the first shift from fossil fuel to electric. Change in the perception of the younger generation towards mobility makes private cars no longer an ‘object of desire’, causing the second shift—going from private to public transportation. Increasing preference for virtual meets over in-person meetings to save the time and energy needed for travel has caused the third shift—from physical to digital. All three shifts have significant societal tailwinds.
•  Technology: Technological advancement plays a pivotal role in any transformational change. Key technological innovations have always formed the foundation of any revolution around the world.
  These shifts are also driven by emerging technologies. Steep falls in the cost of clean energy generated through solar and wind energy has made renewable energy affordable. Changes happening in the energy storage technologies will further encourage use of this energy for mobility application. Technologies relating to AI and machine learning will make shared and autonomous transportation even easier. New manufacturing technologies such as 3D printing and robotics are changing the world of manufacturing. Finally, the telecommunication technologies, including 5G and 6G, are creating a cloud of information across large geographies that can help coordinate the movement of people and goods. We see an increasing rate of acceleration in the change of technologies. We are at the cusp of a cleaner, safer and better transportation.
• Economic model: A sustainable transformation needs to be economically viable. Such economic viability brings in private capital and reduces the need for concessional public funding, which is always scarce.
  The three shifts will essentially substitute the current ecosystem with a completely new ecosystem of transportation. Clearly, this needs significant investments. We see investments happening through private as well as public sources. Moreover, consumer preferences help in increasing revenues, whereas technology advancements help in reducing costs. There is certainly a need for public funding till the new ecosystem crosses the tipping point. We shall come to that in the last lever, P, namely, policy.

•  Policy: Transformational changes need to be anchored in sound long-term policy. Policies provide a systematic set of guidelines for implementing change over a period of time. In order to promote use of clean and shared mobility, the solutions in-line with the objectives should be incentivized, and others should be taxed in order to discourage their usage. For example, implementing variable tolls for private vehicles will help in reducing the less- essential car trips or in shifting towards public transportation, thereby controlling road congestions. Premium tax rates on the purchase of conventionally fuelled vehicles and tax exemption for clean mobility solutions will also aid in the transformation. It is also essential to phase out the incentives gradually as the transformation gains more and more acceptance from society.

Additionally, a large number of investments will be required to cater to the growing demand for batteries in the country. India has set an ambitious target of achieving 30 per cent electric vehicles sales by 2030 across all modes.¹⁵ Battery demand in the country is, thus, expected to grow at the rate of 12 per cent CAGR over the next five years, estimated to reach market value of $4 billion by 2026.¹⁶

The Indian government has already implemented many schemes and has brought policy reforms that are necessary for transforming urban mobility. These include the FAME and FAME-2, the 100 Smart Cities project, a PLI scheme for Advanced Chemistry Cells of Rs 18,100 crore and the Vehicle Scrappage Policy. The government has also made provisions in September 2021 of Rs 120 crore to encourage production of drones and their parts. In addition to these, we have some more suggestions as listed below:
 Corporates should be encouraged to move towards electric mobility to transport goods and people. This can be done by covering the differential expenditure incurred in this transition under CSR by considering it under conservation of environment, as per Section 135 (schedule-VII, subclause-iv) of the Companies Act.
 Development of indigenous technologies and local manufacturing will help in reducing the costs. This can be encouraged by floating innovation challenges, bringing PLI schemes for setting up local manufacturing units, etc.
 Converting existing vehicles into electric ones should be encouraged by the government, as it will cost far less compared to the new ones and accelerate the transformation significantly.

Rethinking Intercity Mobility
While the transformation of urban mobility will be governed by battery electric vehicles, the solution will not be suitable for long- distance intercity mobility, as weight and charging requirement will constrain the load-carrying capacity and travelling range of the vehicle. This challenge can be addressed by using hydrogen fuel cell vehicles, as they are five times more efficient than the conventionally fuelled vehicles and cause practically zero pollution.

Governments, industries and researchers around the world have realized the potential of hydrogen as a clean energy source of the future and thus are focussing on exploiting it. Many countries, including Germany, South Korea, Spain, Japan, UK, etc., have committed significant resources in using hydrogen as fuel for transportation.¹⁷

In Europe, an initiative called ‘Hydrogen Mobility Europe’ (H2ME) was launched to provide fuel cell electric vehicles (FCEVs) access to the first truly pan-European network of hydrogen refuelling stations. This has resulted in 1,400 FCEVs operating in Europe supported through 49 hydrogen stations till date.¹⁸

Japan has set an ambitious target of having 200,000 FCEVs on the road by 2025, while the number was only about 3,600 in 2019. It also intends to make 320 hydrogen filling stations available to the public under its third Strategic Roadmap for Hydrogen and Fuel Cells.

In the US, key hydrogen developments are taking place across several states. California can be considered as a representative example, which already has about 7,800+ cars and a few dozen buses powered by hydrogen on its roads, supported by a relatively small network of 54 hydrogen refuelling stations.¹⁹

Though most of the advancements in utilizing hydrogen fuel cell technology for transportation are seen in the case of road transport, efforts are also being taken to explore the use of fuel cells in other modes of transportation. The Coradia iLint™ is the world’s first passenger train powered by a hydrogen fuel cell. The train is developed by Alstom and has been in commercial service in Germany since 2018. Planes like ZeroAvia, DLR-HY4 and Aerodelft’s Phoenix PT have demonstrated the possibility of using fuel cells for air travel.

India is blessed with natural resources like solar and wind power, and biomass, which can be utilized to generate green hydrogen in abundance. Shifting towards the hydrogen economy will help India reduce its oil import bill significantly. Hydrogen being clean fuel, it will also reduce the pollution levels of the country, which is also in line with India’s United Nations Climate Change Conference COP (Conference of Parties) commitments.

A BRIGHT FUTURE
So far, we have talked about how road transportation in the country can be transformed. Most of these points also apply to other modes of transportation, including railways, metros, ships, and short-distance air travel. Many private companies across the globe have already started working in these areas, and some of them also have prototypes ready for demonstration. Currently, Indian Railways and a ship-building company from the country have expressed their interest in exploring the possibility of using hydrogen and fuel cells for their respective mobility application areas. Though this is just a beginning, with adequate investments and support from the government, one can expect transformation in these sectors over a period of next 20–30 years.

With the developments happening in the field of mobility, we are certain that the future is very exciting. Advancement in the fields of telecommunication, digital technologies and clean energy solutions will play a crucial role in transforming mobility as well. This will make transportation connected, safe and intelligent. In the next 30 years, mobility will see the greatest transformation in the history of humanity.

Hydrogen will have a major role to play in this transformation. Implementing the hydrogen economy can cut down India’s fossil fuel imports at least by $18 billion,²⁰ corresponding to transportation application. Displacing fossil fuels by hydrogen will also help in meeting 30 per cent of India’s United Nations Climate Change Conference COP commitments. Using biomass to generate hydrogen will potentially create 500,000+ jobs in hydrogen-generation plants, supply chain management for the skilled/unskilled workforce and opportunities of rural entrepreneurship, and will also help increase farmers’ income. At full scale, the hydrogen economy can increase India’s GDP by `12 lakh crore (6.2 per cent).²¹

The invention of the internal combustion engine was the first big revolution that transformed the mobility sector. The second revolution was the introduction of battery electric vehicles. The invention of hydrogen fuel cells is the third revolution in the field of mobility, which is just around the corner. Though India could not contribute in the former two, we are confident that India can lead the third revolution. From the invention of zero to Mangalyaan and vaccines for all during Covid-19, India has showcased its ability to innovate and contribute to the world’s progress in the recent past. Similarly, India can also set an example for innovation and mass-scale adoption of FCEVs by making them cost-competitive to the conventional vehicles.

NOTES
1 ‘Vehicular Emissions in India’, Centre for Energy Finance, 8 December 2021, https://bit.ly/3KxfKq2. Accessed on 31 August 2022.
2 Banerjee, Prasid, ‘Microsoft’s Enterprise Metaverse Plans Include Avatars on Teams, Connected Factory Floors’, TechCircle, 3 November 2021, https:// bit.ly/3A3hByY. Accessed on 10 November 2022.
3 ‘Localization –A Solution-Multiplier’, Local Futures, https://bit.ly/3CqiiD1. Accessed on 4 October 2022.
4 ‘Top 3 Indian Companies in the Space Race’, mint, 8 September 2021, https://bit.ly/3RySJoG. Accessed on 4 October 2022.
5 ‘About 60 Startups Registered with ISRO since Unlocking of Indian Space Sector, Says Jitendra Singh’, mint, 12 July 2022, https://bit.ly/3rvAc26. Accessed on 4 October 2022.
6 ‘Air Taxi Market Size Expected to Be 1,700 Trillion Won in 2040’,
ET Auto, 7 January 2022, https://bit.ly/3C6ccax. Accessed on 4 October 2022.
7 ‘In 2021, Delhi Most Polluted Capital in World, No Indian City Met WHO Air Quality Standard: Report’, The Economic Times, 22 March 2022, https:// bit.ly/3yfy2qS. Accessed on 4 October 2022.
8 ‘India’s Oil Import Bill Falls 10 Per Cent to USD 101 Billion in Fiscal Year 2020’, The New Indian Express, 29 May 2020, https://bit.ly/3e59Oce. Accessed on 4 October 2022.
9 ‘70% of Diesel, 99.6 % of Petrol Consumed by Transport Sector’, Ministry of Petroleum and Natural Gas, Government of India, 28 January 2014, https:// bit.ly/3TboGEX. Accessed on 4 October 2022.
10 S., Vasudevan, ‘Space Tourism, Flying Taxis and Drones – The Future of Aerial Mobility?’, LinkedIn, 29 October 2021, https://bit.ly/3y9IVuf. Accessed on 4 October 2022.
11 Sen, Somit, ‘30 Per Cent Vehicles in India Will Be Electric By 2030: Study’, The Economic Times, 17 June 2022, https://bit.ly/3EfhAeg. Accessed on 4 October 2022.
12 ‘As Work From Home Ends, 73% Indian Firms Plan Hybrid Working Model For Employees: Report’, India.com, 6 July 2022, https://bit.ly/3Sy4m0w. Accessed on 4 October 2022.
13 Peek, Sean, ‘Communication Technology and Inclusion Will Shape the Future of Remote Work’, Business News Daily, 13 August 2022, https://bit. ly/2qdhzj9. Accessed on 4 October 2022.
14 Mashelkar, R.A., and Ravi Pandit, Leap Frogging to Pole-Vaulting: Creating the Magic of Radical yet Sustainable Transformation, Penguin Viking, 2018.
15 ‘Status Quo Analysis of Various Segments of Electric Mobility and Low Carbon Passenger Road Transport in India’, GIZ in association with NITI Aayog, https://bit.ly/3e81JDp. Accessed on 4 October 2022.

16 ‘India Lithium-Ion Battery Market – Growth, Trends, COVID-19 Impact, and Forecasts (2021 – 2026)’, GlobalNewsWire, 22 March 2021, https://bit. ly/3yhR2VN. Accessed on 4 October 2022.
17 ‘Germany Leads Pack of Countries Pouring Finance into Hydrogen’, Decarbonisation Technology, 26 March 2022, https://bit.ly/3EoW7xU. Accessed on 21 November 2022.
18 ‘About’, Hydrogen Mobility Europe, https://h2me.eu/about/. Accessed on 31 August 2022.
19 ‘FCEV Sales, FCEB, & Hydrogen Station Data,’ Hydrogen Fuel Cell Partnership, https://bit. ly/3SAMguM. Accessed on 4 October 2022.
20 Calculated based on fuel cost (`32/liter w/o taxes) and the fuel consumption by long-distance transportation (~40 metric tonne).
21 Calculated based on development of hydrogen infrastructure, FCEV sales and hydrogen consumption.

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