Substantial allocations made in several state budgets to advance e-mobility

India’s EV sales are off to an impressive start in 2023, with a total of 278,000 units sold between January 1st - March 23. Over 90% of the sales came from electric two and three wheelers as both businesses and private buyers take advantage of their affordability and lower running costs. The biggest support, though, is coming from the policymakers who recognise the transformative potential of e-mobility in providing cleaner transport and attracting investments for industrial expansion.

States provision for substantial funds in their budgets to advance e-mobility

The following are the additions announced by the state governments to their EV policies for 2023-24:

  • Maharashtra: The state has raised its budget for EV charging infrastructure to Rs. 7.9 crores for this financial year, from 5 crores for FY23. Rs 25 crores have also been earmarked as incentives for the adoption of e2Ws and e4Ws, which will be disbursed by March 31. Maharashtra is already one of the nine with strong demand-side incentives, and it plans to electrify 10% of its new vehicle fleet by 2025, besides mandating that delivery businesses like Amazon, Flipkart, as well as Uber and Ola, electrify at least 25% of their fleet by 2025.
  • Kerala: It has announced the formation of EV consortium and a budget of Rs. 25 crores for the project. An additional Rs 7.98 crores has been allocated to set up charging stations across the state, and electric cab aggregators will be awarded a one-time reduction on taxes. Even more importantly, Kerala is focussing on green hydrogen for long haul vehicles, and has announced Rs. 200 crores to set up green hydrogen hubs in Kochi and Trivandrum.
  • Madhya Pradesh: The state is a participant of the Centre’s Vehicle Scrappage Scheme, and from April 1, 2023 it will provide up to a 25% tax rebate on road taxes for customers that scrap their old cars. Per its EV policy announced in 2019, it also aims to have 25% of all new commercial vehicles to be electric by 2026, and it has waived the parking charges at any municipal facility for e-rickshaws and e-autos. The state is strict about ensuring the commercial EVs do not use domestic or agricultural electrical outlets for charging either, which ensures that the vehicles pay the commercial tariff and doing so actually works out cheaper for them.
  • Gujarat: Another one of the states that leads India in e-mobility, Gujarat has announced that it will allocate Rs. 24 crores for 50 e-buses, Rs 217 crores for the expansion of the EV ecosystem and Rs 200,000 crores for green initiatives.
  • Tamil Nadu: 46% of the e2Ws sold in India were built in Tamil Nadu, and the state will provide Self Help Groups (SHGs) with electric autos at a cost of Rs. 20 crores. It has additionally allocated a budget of Rs.1,248 crores to the Environment, Climate Change and Forests Department.
  • Karnataka: It has announced Rs 400 crores under the Babu Jagajeevanram Self Employment Scheme, which will make available a 50% subsidy (up to Rs. 2 lakhs) on the purchase of e3ws & e4ws for commercial use, specifically to individuals from the Scheduled Caste and Scheduled Tribes. Additionally, government offices will receive EV charging stations and the state transport fleet will receive more electric buses.
  • Delhi: The National Capital led the country in the percentage sales of EVs, with 16.8% of its new vehicles sold in December 2022 coming from the category. The sales have dipped a little in 2023, but the government’s aggressive stance towards promoting e-mobility saw it announce the induction of 1600 new zero-emission electric buses going forward, including 100 feeder buses.57 of the city’s existing bus depots will also be converted to charge e-buses, and a unique service will be to launch 100 Mohalla Bus that will serve as electric last-mile connectivity for local communities. The city’s bus service gets a total budget allocation of Rs 3,500 crores, and a pilot e-scooter sharing service will be launched that will make available 1,500 units across 250 locations within the next 12 months.
  • Goa: The state has proposed to relaunch its EV subsidy scheme this year, for which Rs. 25 crores have been allotted. It will also incentivise the public transport operators to replace their old vehicles with EVs, and 31.92 crores have been earmarked to expand the state’s electric bus fleet.

Some other states that have announced positive measures are Assam, Bihar, West Bengal, Rajasthan, Uttar Pradesh and Haryana. The common features for this year have been the increased budgetary allocations to acquire more electric buses, reduction in road and registration taxes for customers and the availability of funds to expand the number of publicly-accessible EV charging points.

The momentum is thus strongly towards increased policy and financial support for EVs. Meanwhile, the increasing attention towards green hydrogen for heavy vehicles — especially for freight trucks — will be an interesting segment to watch as freight trucks only account for 2% of India’s road transport fleet but are responsible for 40% of its emissions. Overall, the trends point to the consistent efforts towards decarbonising India’s transport sector, with EVs emerging as a clear winner as they allow for significantly lower ownership costs at the same time.