EV Subsidy in India Unveiled: 5 Important Points You Need to Know

Introduction:

EV Subsidy in India: The Indian automotive industry is undergoing a significant transformation as the country focuses on reducing carbon emissions and dependence on fossil fuels. Electric Vehicles (EVs) are a cornerstone of this movement. To accelerate the adoption of EVs, the Government of India and various state governments have introduced a slew of subsidies, incentives, and policies that make EVs more affordable for consumers and lucrative for manufacturers.

In this blog, we’ll take an in-depth look at the EV Subsidy in India, their eligibility criteria, and their benefits. We’ll also list these subsidies in detail, covering both central and state-level initiatives.

1. Why EV Subsidies Are Essential for India

The push for EV adoption is part of India’s broader commitment to achieve net-zero carbon emissions by 2070. EV Subsidy in India aim to:

1. Reduce the initial cost of EVs, which remains a barrier to adoption.
2. Encourage the development of EV manufacturing and ancillary industries.
3. Promote research and innovation in EV technologies.
4. Improve air quality in urban areas by reducing vehicular emissions.

2. Central Government EV Subsidy in India

The central government has implemented several flagship programs to promote EVs, including tax benefits and direct purchase subsidies. Here’s an overview:

1. FAME India Scheme

Faster Adoption and Manufacturing of Electric Vehicles (FAME) is India’s flagship initiative to promote EV adoption. It has been implemented in two phases:

• FAME Phase I (2015-2019): Focused on demand incentives for hybrid and electric vehicles and developing EV infrastructure like charging stations.
• FAME Phase II (2019-Present): Allocated ₹10,000 crore for demand incentives, charging infrastructure development, and administrative expenses. Key features include:
  • Subsidy Amount: Up to ₹15,000 per kWh for electric two-wheelers (with a cap of 40% of the vehicle cost), ₹20,000 per kWh for three-wheelers, and ₹10,000 per kWh for electric four-wheelers used for commercial purposes.
  • Eligibility: EVs must meet performance and efficiency benchmarks. For two-wheelers, the ex-factory price should not exceed ₹1.5 lakh.
  • Impact: Over 7,000 electric buses and 7 lakh EVs have benefited under FAME II.

2. GST Reduction

The Goods and Services Tax (GST) on EVs has been reduced from 12% to 5%. Charging stations also attract a reduced GST rate of 5%.

3. Income Tax Benefit

Under Section 80EEB of the Income Tax Act, individuals can claim a deduction of up to ₹1.5 lakh on the interest paid on loans taken for purchasing an EV.

4. Production-Linked Incentive (PLI) Scheme

The PLI Scheme for Advanced Chemistry Cell (ACC) batteries and the automotive sector aims to reduce reliance on imports and foster domestic manufacturing of EV components, including batteries.

5. Customs Duty Exemption

To promote domestic EV assembly and reduce costs, the government has provided exemptions or reductions in customs duty on specific EV components and parts.

3. State-Level EV Subsidy in India

Several Indian states have introduced their EV policies tailored to local needs, focusing on demand incentives, tax benefits, and infrastructure development. Below is a detailed list of state-wise subsidies:

1. Delhi

• Policy: Delhi EV Policy 2020.
• Subsidy Details:
  • ₹5,000 per kWh for two-wheelers (up to ₹30,000).
  • ₹30,000 for e-autos and e-rickshaws.
  • ₹1.5 lakh for electric cars (first 1,000 cars sold).
• Additional Benefits:
  • Waiver of road tax and registration fees.
  • Subsidies for private and public charging stations.

2. Maharashtra

• Policy: Maharashtra Electric Vehicle Policy 2021.
• Subsidy Details:
  • ₹5,000 per kWh for two-wheelers (up to ₹25,000).
  • ₹10,000 per kWh for four-wheelers (up to ₹1.5 lakh).
  • Additional early-bird incentives for EVs purchased before December 31, 2021.
• Additional Benefits:
  • Road tax exemption for EVs.
  • Subsidies for developing charging infrastructure.

3. Gujarat

• Policy: Gujarat EV Policy 2021.
• Subsidy Details:
  • ₹10,000 per kWh for two-wheelers (up to ₹20,000).
  • ₹10,000 per kWh for three-wheelers (up to ₹50,000).
  • ₹10,000 per kWh for four-wheelers (up to ₹1.5 lakh).
• Additional Benefits:
  • Waiver of registration fees.
  • Target to develop 250 charging stations.

4. Karnataka

• Policy: Karnataka Electric Vehicle and Energy Storage Policy 2017.
• Subsidy Details:
  • Focused on industrial subsidies for EV manufacturing.
  • Interest-free loans for EV manufacturers.
• Additional Benefits:
  • Exemption from road tax for personal EV buyers.
  • Establishment of EV industrial parks.

5. Tamil Nadu

• Policy: Tamil Nadu EV Policy 2019.
• Subsidy Details:
  • 100% road tax exemption for EVs.
• Additional Benefits:
  • Subsidies for establishing EV manufacturing plants and charging infrastructure.

6. Rajasthan

• Policy: Rajasthan EV Policy 2022.
• Subsidy Details:
  • ₹5,000 per kWh for electric two-wheelers and three-wheelers.
• Additional Benefits:
  • Road tax and registration fee waivers.

7. Telangana

• Policy: Telangana EV & ESS Policy 2020.
• Subsidy Details:
  • 100% road tax and registration fee exemption.
• Additional Benefits:
  • Focused incentives for EV manufacturers and battery recycling units.

8. Uttar Pradesh

• Policy: Uttar Pradesh EV Manufacturing and Mobility Policy 2019.
• Subsidy Details:
  • Waiver of registration fees for EVs purchased within the state.
  • Tax incentives for EV manufacturing units.

9. Andhra Pradesh

• Policy: Andhra Pradesh Electric Mobility Policy 2018-2023.
• Subsidy Details:
  • Focused on incentives for EV manufacturing rather than direct consumer subsidies.
• Additional Benefits:
  • Waiver of road tax and registration fees.

10. Kerala

• Policy: Kerala EV Policy 2019.
• Subsidy Details:
  • Road tax exemptions for EVs.
  • Special focus on electrifying public transport.

4. Key Highlights of EV Subsidy in India

Two-Wheelers: Many states having EV Subsidy in India, including Delhi, Gujarat, and Maharashtra, provide direct subsidies for electric two-wheelers, significantly reducing their on-road cost.

Four-Wheelers: While fewer states offer subsidies for personal electric cars, states like Delhi and Gujarat provide substantial incentives for the first few buyers.

Commercial EVs: Several states incentivize e-rickshaws, e-autos, and electric buses, aligning with goals to improve urban mobility and reduce emissions.

Road Tax & Registration Waivers: Almost all states offer 100% exemption on road tax and registration fees for EVs.

Charging Infrastructure: EV Subsidy in India for private and public EV charging stations are a critical part of most state policies.

5. How to Avail EV Subsidy in India

To take advantage of EV Subsidy in India, follow these steps:

1. Choose an Eligible EV Model: Ensure the EV meets the subsidy requirements, such as price caps or efficiency benchmarks.
2. Purchase From Authorized Dealers: Many subsidies are credited directly to the buyer at the time of purchase.
3. Provide Necessary Documentation: Submit identity proof, address proof, and vehicle registration details.
4. Claim Tax Benefits: For income tax deductions, ensure loan details and repayment proofs are submitted during tax filing.
5. Leverage State-Specific Portals: States like Delhi and Maharashtra have dedicated online portals for subsidy applications.

Conclusion

EV Subsidy in India have significantly contributed to the growth of the electric vehicle market by making them more accessible and affordable. With a wide array of incentives from both central and state governments, now is an excellent time for individuals and businesses to switch to EVs. By understanding the subsidies available, you can maximize the benefits and contribute to a greener future.

Investing in an EV isn’t just an economic choice but a commitment to sustainable living, aligning with India’s vision for a cleaner and more energy-efficient transportation ecosystem.