by Saon Ray, Vasundhara Thakur and Samiha Singh
In this blog we present findings from a paper that traces the evolution of India’s industrial policy, focusing on the policy towards the electric vehicle industry. India’s steady transition towards electric vehicles is being fuelled by government policies both at the central and state level. While the paper discusses the policies at the centre – namely FAME I and FAME II, and PLI, in this blog we discuss only the state level policies. The paper analyses the EV policies of three states namely Karnataka, Maharashtra, and Tamil Nadu in depth. The state level policy analysis reveals the distinct nature of each of these policies as they address a different mix of incentives in their policies. Further, the degree and extent of incentives offered also differ. The metric of progress selected in the paper, electric vehicle registrations, reflects the positive influence of the EV policies in these states.
EV policies at the state-level
In addition to the central government’s policy initiatives, state governments have been proactively contributing to the EV policy landscape by formulating their own policies. Several states have released their EV policies. Amongst the states that have launched their EV policies, we have selected three Indian states namely Karnataka, Maharashtra, and Tamil Nadu.[1] Karnataka, Maharashtra, and Tamil Nadu are three of the top five states driving the EV registrations. Further, Maharashtra and Tamil Nadu house both automotive manufacturing centres and automotive component clusters and Karnataka houses automotive manufacturing centre/automotive cluster.
An analysis of EV policies of three states
Each state EV policy caters to different aspects of the EV sector and contains incentives and measures for different EV sector actors. In Table 1, we classify the provisions contained in the states’ EV policies under the following broad categories:
- Supply-side incentives and measures
- Demand-side incentives and measures
- Labour force-related incentives and measures
- Research and development-related incentives and measures
- Charging stations and other network infrastructure-related incentives and measures
Incentives and measures in these broad categories are further classified under different sub-categories.
Table 1: A snapshot of the three states’ EV policies
| Broad category | Sub-category | Maharashtra | Karnataka | Tamil Nadu |
| Supply side incentives and measures | Manufacturing related | Measures taken to complement and/or leverage the Government of India’s initiatives, particularly the production-linked incentive scheme in ACC battery manufacturing | Measures taken to establish EV manufacturing zones and provision of flatted factories | Special measures taken for EV battery manufacturing |
| Exemptions and waivers | Stamp duty exemption and concessional registration charges | Stamp duty exemption | ||
| Supporting infrastructure related | Speedy EV registration | Complete reimbursement of land conversion fee; dedicated areas for testing EV-related technologies; complete exemption of tax on electricity tariff | Creation of EV parks and vendor ecosystem; promotion of logistic parks and free trade warehousing zones; creation of plug and play manufacturing facilities; complete exemption on electricity tax till December 31, 2025; subsidy on the cost of land | |
| Investment and/or financing related | Investment promotion subsidies and interest-free loans on net SGST | Complete SGST reimbursement | ||
| Other | Creation of state EV fund | One-time capital subsidy for establishing effluent treatment plants | Capital subsidy on investments | |
| Demand side incentives and measures | Purchase related | Fiscal incentives linked to the vehicle type | Tax exemption on transport as well as non-transport EVs | 100 per cent road tax exemption will be provided until December 30, 2022; waiver on registration charges/fees |
| Post-purchase related | Provision of additional incentives (to be transferred to the customers) to OEMs for offering a minimum 5- year warranty for batteries; additional incentives for OEMs offering buyback schemes | |||
| Awareness-related | Design and enforcement of an awareness programme | |||
| Other | Building bye-laws amendment and promotion of apartment associations for providing designated plug and/or charging stations | |||
| Labour force related incentives and measures | Employment related | Employment incentive in the form of the reimbursement of employer’s contribution to EPF | ||
| Skilling-related | Amendment of existing courses and/or creation of new courses and development of skill enhancement centres | Establishment of an EV skill development centre, introduction of electric mobility courses, and provision of financial support in the form of stipend for in-plant training to EV manufacturers | Introduction of short-term courses and training | |
| Research and development related incentives and measures | Promotion of EV start-ups | Establishment of ‘Karnataka Electric Mobility Research and Innovation Centre’, working groups, a venture capital fund for electric mobility research, and a start-up incubation centre | ||
| Charging stations and other network infrastructure-related incentives and measures | Setting up of public charging stations | Different measures catering to different charging and other network infrastructure aspects | Different measures taken up for development of charging and network infrastructure. | |
Source: Authors’ compilation from different sources
A glance at the table reveals the differential composition of incentives and measures for each of the three states. While Tamil Nadu and Karnataka’s EV policies provides more supply-side incentives, Maharashtra’s EV policy is more demand-side incentive oriented. There are other differences, for example, within the labour-force related incentives and measures, it can be observed that all the three states provide skilling-related incentives. However, only Tamil Nadu provides employment-related incentives. Further, all the three states offer charging stations and other network infrastructure-related incentives and measures in some form or the other.
The launch of EV policies in Karnataka, Maharashtra, and Tamil Nadu have positively influenced the electric vehicle registrations in these states. It must be noted that this is one of the many indicators that can be employed to gauge policy effectiveness. The EV penetration in terms of aggregate annual vehicle registrations for Karnataka, Tamil Nadu, and Maharashtra was pegged at 2.83 per cent, 1.98 per cent, and 1.55 per cent respectively in 2021 as per the VAHAN data. This implies the EV penetration in these three states were extremely low but increasing quite rapidly.[2]
Conclusion
Assessment of the registration data also sheds light on the dominant vehicle segments in the battery-operated electric vehicle space in these three states. While for Karnataka and Maharashtra 2Ws, 3Ws, and light vehicles emerge as important contributors to the overall electric vehicle registrations, 2Ws and light vehicles are significant contributors in case of Tamil Nadu. However, caution may need to be exercised in dealing with these findings as there may be several factors affecting electric vehicle registrations with an EV policy being one.
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Notes:
[1] These three states have been selected on the basis of the following two factors 1) Share in aggregate electric vehicle registrations 2) Presence of automotive clusters and automotive component clusters
[2] The corresponding figures upto June 2022 stood at 5.78, 3.70 and 4.88% respectively.