What are the Government Incentives & Policies for Electric Vehicles in India?

The worldwide Electric Vehicle (EV) sector has grown significantly during the previous decade. China has been the EV industry's pioneer, with significant advancements in battery production capacity, charging infrastructure, and new EV model development. China's enormous manufacturing capability allows them to make EVs at a reduced cost.

India, on the other hand, lags behind other nations in terms of electric vehicle market penetration. When it comes to electric vehicles, the country has a low adoption rate. There is still a lot of work to be done in terms of model types, charging infrastructure, and financial incentives for EV makers.

India now dominates the 2W and 3W markets and is among the top five in passenger cars and commercial vehicles (CV). Despite this, the country's EV share remains minimal. During 2012, over 1,04806 EVs have been registered in India.

Electric buses are progressively becoming commonplace sources of transportation. Over 1,171 electric buses were sold in FY2021. This figure is went up to roughly 1,939 in FY2022. In its budget for 2023-2024, the Government of India maintained its support for the EV industry. To improve the market penetration of EVs in India, the government recommended many measures.

Green Growth was one of the top seven goals of the Union Budget 2023. The Pro-EV budget prioritized critical initiatives such as lowering the customs tariff on lithium batteries from 21% to 13% and continuing EV battery subsidies for another year. These are great steps since they will assist to create demand.

Policies and Incentives for EVs in India

The Government of India is consistently demonstrating its commitment to establishing India as a worldwide leader in the EV industry. The government has developed a number of programme and incentives to increase demand for electric cars and to encourage manufacturers to engage in R&D of electric vehicles and related infrastructure.

So far, the Indian government has announced FAME-II, PLI SCHEME, and Battery Switching Policy, Special Electric Mobility Zone, and Tax Reduction on EVs. The following are India's government policies and incentives for electric cars.

FAME-II

The Indian government started the FAME India project on April 1, 2015, with the goal of reducing the use of gasoline and diesel vehicles. This project was a critical component of India's electric mobility. The FAME India Program intends to encourage the use of all types of automobiles.

Four focus points of FAME India Scheme are as follows:

1. Demand for Technology
2. Pilot Projects
3. Technology Development
4. Infrastructure for Charging

The FAME II plan was launched in April 2019 with a Rs 10,000 crore budget to support 500,000 e-three-wheelers, 7,000 e-buses, 55,000 e-passenger vehicles, and a million e-two-wheelers. The goal was to increase EV adoption in India. The plan was set to expire in 2022. Nevertheless, the Government of India has chosen to prolong the FAME-II plan through March 31, 2024 in the budget for FY2022-23.

PLI Scheme

The Department of Heavy Industries will start the Production Linked Incentive for Advanced Chemical Cell Battery Storage in June 2021. (PLI-ACC Scheme). Its purpose is to attract both domestic and foreign investors to invest in India's Gigascale ACC manufacturing plants. The PLI-ACC Scheme is one of thirteen initiatives approved by the Union Government to help the Prime Minister achieve his aim of "Atmanirbhar Bharat."

The total payout under the plan is INR 18,100 crore. Money will be paid over a five-year period after the production plant is functioning. The policy requires that the manufacturing plant be operational within two years in order to qualify for subsidies, and the Bid Documents state that a 60 percent domestic value addition must be accomplished within five years after that.

Battery Swapping Policy

According to the Finance Minister, the government aims to implement a Battery Switching Policy. This plan would unify the battery specifications used in EVs across India. The law will aid in the promotion of EVs in time-sensitive service sectors such as delivery and intercity transportation because exchanging a depleted battery for a fully charged one is a more feasible choice than on-the-spot recharging, which may take hours.

This will facilitate interoperability. If all of the batteries in the same category of EV have the same configuration, consumers do not need to be concerned about the configuration of new batteries being installed when switching batteries.

Battery switching, if done correctly, is projected to gain acceptability in commercial applications such as 2W and 3W automobiles, allowing for faster penetration in these segments.

Manufacturers will profit from the Battery Switching Policy as well. As the standards are implemented, spare parts for machines will be more readily available. Additionally, by leveraging economies of scale, this strategy will help battery manufacturers reduce prices.

Duty Reductions on Electric Vehicles

Customs charges on nickel ore and concentrates will be reduced from 5% to 0%, nickel oxide from 10% to 0%, and ferro nickel from 15% to 2.5 percent, according to the budget. Nickel Manganese Cobalt (NMC) is an essential component of lithium-ion batteries used in electric cars (EVs). These ores are in short supply in India, and battery manufacture is heavily reliant on them.

As a result, nickel alloys are largely imported. The reduction in customs duties will assist local EV battery manufacturers in lowering production costs. A plan to reduce customs duty on motor parts from 10% to 7.5 percent will also assist to reduce the overall cost of EVs.

Special E-Mobility Zone

The government intends to create electric car mobility zones. Only electric cars or equivalent vehicles will be authorized to operate in the administration-designated zones. Similar policies are common in several European nations as well as China.

The unspoken benefit of designated electric mobility zones is that they will assist to reduce overcrowding caused by private automobiles. Individuals travelling through these zones must either drive their own EV or ride a public EV vehicle, boosting the market share of EVs.

CarBike360 Says

Individuals across areas, sectors, and philosophies are enthused about electric automobiles. EVs will eventually become a trillion-dollar business while simultaneously helping to save the environment. Given their vast quantity and popularity, electrifying automobiles in emerging countries is crucial to rapidly decarbonizing transportation. As a result, the government's involvement becomes vital. The impacts of incentives are extremely obvious when it comes to government subsidy schemes.

Government subsidies are not the sole strategy to increase electric car sales. As previously stated, manufacturers, as well as changing customer behaviour, have practical repercussions. Successful initiatives show how governments may help in resolving these issues. We hope that the government's actions would allow India to continue on its path to a greener future.