- The Tamil Nadu government has released a new Electric Vehicle Policy to expand the sector’s growth in the state.
- The policy provides for incentives to battery swapping centres and addresses charging infrastructure, demand side aid, and workforce training. These are updates from the state’s last EV Policy of 2019.
- Experts claimed that the new policy is likely to push electric public mobility and assist in the transition of the workforce into the emerging sector.
In a bid to give impetus to the electric vehicle sector, the Tamil Nadu government has released its new Electric Vehicles policy in which it discusses initiatives such as battery swapping and training workforce that is currently engaged in the conventional fossil-fuel vehicle industry, to make a shift to the EV sector. The new policy comes after the expiry of the state’s earlier EV policy of 2019. In the policy, the state government has also announced support for charging infrastructure, electric mobility in public transportation, and incentives for consumers.
The new policy carries forward the earlier available benefits for EV consumers such as exemption from road taxes and registration charges as well as permit fee waivers. Along with these benefits, it adds special incentives for consumers to boost the demand for electric vehicles.
The 2023 policy recognises private electric cycles and commercial electric two-wheelers, three-wheelers, and four-wheelers for incentives that will be provided to consumers through direct benefit transfer. It has announced 20% of cost as the incentive for e-cycles with a ceiling of Rs. 5,000. For two-wheelers, the incentive is a Rs. 10,000/kilowatt-hour of battery capacity with a ceiling of Rs. 30,000 and for e-buses, the incentives can go up to Rs. one million, under the policy.
Tamil Nadu has faced criticism for poor demand for EVs and this policy aims to address that through these incentives. A February 2023 report of Climate Trends, which analysed EV policies of major Indian states, claimed that Tamil Nadu is one of the states with the weakest demand-side incentives for the EV sector. The report also pointed out other lacunae such as the lower penetration of electric buses in the state and pointed out that the 2019 EV policy talked about 5% of public buses converting to electric by 2030, but by the end of November 2022, the state did not have a single electric bus on the road. The 2023 policy, meanwhile, has increased the target of EV bus fleets to 30% from the earlier 5% in the 2019 policy and the state government plans to achieve this target by the end of 2030.
Special support for battery swapping, charging infra
Tamil Nadu’s new EV policy gives special assistance for battery swapping stations and battery charging stations in the state. The state has announced a capital subsidy of 25% for the first 200 public battery swapping centres in the state. It has also announced a 25% subsidy of cost involved in the purchase of equipment and machinery during the policy period, for the first 200 public fast charging stations and the first 50 private e-aggregator (like food-delivering companies) charging stations. The policy also recognises the cost of renewable energy equipment bought for such charging stations. Firms can qualify for incentives in case 75% of the energy of such stations comes from clean energy sources.
“Most of the incentives announced under the policy for charging stations are new and specific. The 2019 policy was more intent-oriented and suggestive. The new policy has also announced increased demand-side incentives for EV consumers. It will likely reduce the upfront cost of EVs in the consumer market. It is likely to be in addition to the subsidy consumers received under the Union government’s Faster Adoption of Manufacturing of Electric Vehicles (FAME-II) scheme,” Deepak Krishnan, Associate Director (Energy) at the World Resources Institute WRI-India, told Mongabay-India.
Sivasubramaniam Jayaraman, who works as the National Lead (Transport Systems and e-mobility) at the Institute of Transportation and Development Policy (ITDP) said, “The new EV policy has given a thrust on the shared mobility segment. The government has now planned to get 30 percent of its public buses electrified by 2030. We are hopeful that with the new norms, we can also see increased penetration of electric buses and electric autos onto the roads of Tamil Nadu soon.”
Manufacturing sector assistance
Tamil Nadu, a leading manufacturing hub of major EV companies such as Hyundai, Nissan, TVS, Mahindra, and Daimler, as outlined in the policy report, has meanwhile maintained several provisions of its earlier policy to support supply-side assistance. The government aims to attract Rs. 500 billion in investments in the EV manufacturing industry during the policy period and create 1.5 lakh new jobs. It also notes that it aims to become the preferred destination of EV manufacturing in South-East Asia, besides accelerating EV adoption in the state.
The new policy also has planned to give investment promotion subsidies to the electric vehicle manufacturers by reimbursing the State Goods and Services Tax (SGST), turnover subsidy, capital subsidy, and subsidy on advanced chemistry cells (ACC). However, the policy has kept the options ‘flexible,’ allowing the manufacturers to choose one of the subsidies that suit them.
Under the turnover subsidy, the government has proposed giving a 2% subsidy on the total annual project turnover of any new or expansion of an EV project. The policy also offers a 15% subsidy on the total capital in such projects. On the other hand, those investing in the battery manufacturing sector will get a 20% subsidy on their investments if they work in the ACC sector. ACC are advanced cells used in the EV sector. The Union government is also giving incentives for local manufacturing of these ACC in India to cut imports of EV batteries.
Another unique hand-holding support from the policy comes through a special dedicated “transition support” where the government has planned to support the companies engaged in the fossil fuel-based automobile industry but want to transition into EV production. “Transition support can be availed in the form of a Training Subsidy of Rs. 4000 per worker per month for six months for residents of Tamil Nadu. For women and transgender employees, persons with benchmarked disabilities, and persons from SC/ST communities, the training subsidy shall be Rs. 6000 per worker per month for six months,” the report said.
Siddharth Goel, Senior Policy Advisor at the International Institute for Sustainable Development (IISD), told Mongabay-India, “Compared to EV policies in other states, Tamil Nadu earlier provided lower demand-side support, which the new policy has tried to rectify. In addition, the new policy has a positive focus on recycling used EV batteries for reuse. The provision of a single window, dedicated EV cell in the state is also likely to facilitate increased investment in the sector.”
Banner image: Electric automobile in Tamil Nadu. Photo by த*உழவன்/Wikimedia Commons.