Introduction

The electric mobility revolution has well and truly gained momentum. Electric Vehicles are gradually becoming a preferred choice due to raising awareness on the matter, lower cost of ownership of the EVs, and growing charging infrastructure in the country. Other than the mentioned factors - Government has played a pivotal role in catalysing the adoption of electric vehicles.

Background

The first step towards formally announcing an EV-dedicated policy in India to achieve energy security and promote sustainable transport solutions came in 2013 with the launch of the National Electric Mobility Mission Plan (NEMMP). As part of this mission, the Ministry of Heavy Industries and Public Enterprises launched the FAME (Faster Adoption and Manufacturing of Electric Vehicles) India scheme in 2015, which was further upgraded to FAME II in 2019.

The objective of FAME I and FAME II policies was to boost EV adoption through demand creation incentives, technology platforms, pilot projects, and investing in charging infrastructure.

Incentives under FAME I and FAME II

FAME I

Period: 2015-2019

Outlay: 895 CR

Incentives

• Incentivised 2.78 lakh EVs through subsidies worth Rs. 343 Cr
• Sanctioned 465 e-buses to various states

FAME II

Period: 2015-2019

Outlay: 895 CR

Demand generation incentives:

• Incentive of Rs.10,000 for every kWh of battery capacity for all EVs, except buses.
• GST on EVs was reduced from 12% to 5%
• GST on chargers and charging stations reduced from 18% to 5%.
• EVs exempted from road tax, parking charges and toll charges in specific states.
• Till the end of Dec 2022, a total of 743,000 electric vehicles were incentivised and 2,877 EV charging stations were approved.

Supply incentives for manufacturers:

• PLI scheme called National Programme on Advanced Chemistry Cell (ACC) battery storage implemented for achieving manufacturing capacity of 50 GWh of ACC and 5 GWh of niche ACC with an outlay of Rs.18,100 Cr.
• Reliance New Energy Limited, Ola Electric Mobility and Rajesh Exports have been approved by the Ministry of Heavy Industries for receiving incentives under the PLI scheme for manufacturing of Advanced Chemistry Cell (ACC) storage. Ola has received incentives for setting up ACC capacity of 20GWh while Reliance New Energy Limited and Rajesh Exports have received incentives for setting up ACC capacity of 5GWh each
• The Ministry of Heavy Industries has given subsidy amount of Rs. 5,294 Cr to EV manufacturers on the sale of 11,79,669 EVs as of Dec 2023.
• The Ministry of Heavy Industries has also sanctioned Rs. 800 Cr. as capital subsidy to the three Oil Marketing Companies (OMCs) of the Ministry of Petroleum and Natural Gas for establishment of 7,432 electric vehicle public charging stations.

Incentives provided by different state governments include:

• Capital subsidies across the EV supply chain ranging from 15% to 25% of total investments or fixed asset value
• Interest subvention on term loans
• Annual interest reimbursement for loans for land acquisition and infrastructure development for EV parks and individual manufacturing units
• Concessions on taxes, tariffs, and duty

Other incentives

In addition, there are several other financial incentives provided by the government that make EVs affordable for the buyers. These include:

• Direct discount to the buyer on the total cost of the vehicle at certain dealership.
• Tax deduction of up to Rs. 1.5lakhs on interest paid on EV loans
• Road tax exemption at the time of purchase
• Scrapping incentive provided on de-registering old petrol and diesel vehicles

Along with these incentives, the central government has also directed all state governments to formulate and implement EV policies and incentives to accelerate adoption of electric vehicles.