India has rolled out a long list of support incentives in response to the considerable challenge of achieving critical mass in the electric mobility transition
India’s EV market is on a sharp rebound following a short-lived slump caused by the second wave of the COVID-19 pandemic. Sales figures across categories have jumped nearly 800% since May this year on the back of strong policy support. By 2030, about 30% of the new vehicles registered in India will be electric as per the global Electric Vehicles (EV) outlook by International Energy Agency. In order to facilitate faster adoption of electric vehicles in the country, the central government has launched several incentives and schemes to complement state-level policy efforts. This has significantly raised the count of electric vehicles the Indian roads to approximately 700,000 now. This article throws light upon various existing and upcoming incentive schemes for EVs.
- Policy Support – Demand Incentives for Vehicles and Charging Infrastructure
Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME)
With the intent to boost adoption and manufacturing of EVs in India, the Government of India launched FAME II, which finetunes the pilot FAME I scheme. Launched in April 2019, FAME II was launched with a significant budget outlay of ₹ 1,000 crores ($ 1.34 billion) for a period of 3 years. The scheme was recently extended to March 2024 to compensate for delays caused by caused by the COVID-19 pandemic. Moreover, the government is planning to rework the existing FAME II scheme to pare the cost of Evs, more in line with the costs of ICE vehicles. Recently, the demand incentives for electric 2-wheelers has increased by 50% to ₹ 15,000 per kWH with a cap of 40% of the total vehicle cost.
With FAME II, the government has also set its sights on increasing the share of EVs in shared transport, primarily buses. By August 2020, 5,595 E-buses buses have been allocated to 64 cities which includes all the five metropolitans. FAME-II incentives, however, are not without their set of pre-conditions. Subsidies are only applicable to vehicles using advanced battery technology like Lithium Ion batteries, and commercial four wheelers (private cars are not subsidised).
- Special Classification and Differential Treatment for EVs
Green Number Plates across India for toll taxes and other benefits
The government has announced green number plates for EVs across India to allow their easy identification for concessional benefits on the toll taxes, free entry for the congested/restricted traffic zones and preferential parking spaces reserved only for EVs. These steps create an indirect impact on encouraging customers to adopt EVs.
- Demand Aggregation Thrusts
Go Electric Campaign
The Go Electric Campaign, recently announced by the Government of India, aims to encourage EV adoption in India. The Bureau of Energy Efficiency (BEE) under the aegis of Ministry of Power (MoP) has been designated to provide all required technical support and initiate awareness campaigns to promote the country’s EV ecosystem. This campaign targets fossil fuel demand, which leads to higher CO2 emissions, and promotes more carbon-efficient alternatives such as e-mobility and electric cooking. This initiative is likely to aid in replacing fossil fuels with electricity and pare India’s annual fossil fuel import bill of ₹ 8 lakh crores ( ~$ 107 billion).
- Easing Permits and Fees
Exemptions from Fees for Registration Certificate (RC) and Renewals
The Ministry of Road Transport and Highways (MoRTH) issued a draft notification proposing to exempt battery operated vehicles (BOV) from payment of fees towards issue or renewal of registration certificate (RC) and assignment of a new registration mark. This is an encouraging move for the EV industry as any step taken towards lessening the burden on consumers purchasing EVs goes a long way in driving up demand.
- Ramping up indigenous Battery Manufacturing
Production Linked Incentives for Advanced Chemistry Cell (ACC) Battery Storage
India’s central cabinet approved the proposal to implement the Production Linked Incentive (PLI) Scheme ‘National Programme on Battery Storage’ (NPACC). An outlay of ₹ 18,100 crore ($ 24.3 bn) has been earmarked by the government towards this scheme, which is intended to establish local manufacturing capacity of 50 GWh of ACC and 5 GWh of niche ACC capacity. Currently, India imports nearly all of its requirement of advanced chemistry batteries and/or cells from China and elsewhere.
- Reaching Rural Markets
Rural e-Mobility programme to promote the use of electric vehicles
To promote the use of electric vehicles across India, Common Service Centre (CSC) has launched a Rural e-Mobility Programme to urge people to switch to electric vehicles. The CSC scheme is a special purpose vehicle under the Ministry of Electronics and IT.
The e-Mobility programme aims to provide e-scooters and e-rickshaws to people at 100 CSC centres to encourage the switch to e-mobility. CSC has tied up with various e-vehicles manufacturers and financial institutions, while also setting up charging infrastructure at CSCs.
- Tax incentives for individuals
Unheeded Incentive on Purchase of Electric Vehicle on Loan Section 80 EEB is a provision where one can claim Deduction up to ₹ 1.5 lakhs (Rs. 1.5 mn) on the interest for the purchase of an electric vehicle. It was introduced for the first time in the Finance Act, 2019. Electric vehicles for domestic use include cars, bikes, scooters, electric bicycles and such.