Central & State Incentives on EVs – Are These Enough?

India is the country with the most number of vehicles. India sells 10 million motorcycles every year. A record 2.9 million passenger cars and commercial vehicles were sold in India in 2020. This figure then fell by roughly 0.9 million units from the previous year. With a population of around 1.4 billion people, the addressable market for vehicle sales is more than twice as big as that of South Korea (source: statista). These incentives help to reduce pollution and decrease dependency on Internal Combustion Engines. Our nation isn’t even close to smaller European countries that have more vehicles than India.

One might wonder: What is the problem?

– First, an electric vehicle’s initial cost is more expensive than a conventional car.

– India’s infrastructure is another issue that is further limiting the sale of EVs.

– Electric vehicles are still a relatively new technology. It takes time for new things to be accepted in society.

India’s government is trying to establish a reliable infrastructure for electric cars. However, technology is rapidly evolving. The EVs of today look and feel like an IC-engine vehicles. They have the same creature comfort and driving dynamics as IC-engine vehicles.

It all comes down to the pricing of vehicles. No matter how you compare them, EVs aren’t as pocket-friendly as conventional petrol/ diesel cars, at least in terms of initial costs. While it is possible to argue that EVs are more expensive than a petrol car over the long term, we don’t know what the future holds 10 years later. We do?

Manufacturers and Governments have to address this issue to increase EV penetration in India. This is exactly where the Federal structure excels. The central government offers subsidies through the FAME II scheme. State governments offer additional benefits to buyers.

These incentives can vary depending on where you live in India. We have therefore compiled a list listing all states and their schemes to help people buy electric vehicles.

Fame II by Central Government

Before we get to state-granted incentives, let’s first understand FAME and the benefits it offers. FAME is a Department of Heavy Industries policy. FAME stands for Faster Adoption and Manufacturing of Hybrid and Electric Vehicles. It was originally FAME, but it was renamed FAME-II in 2019. These incentives go beyond the state incentives and can be used throughout India.

– Two-wheelers: Rs 15,000 for each kWh of battery capacity (Maximum 40 per cent of vehicle cost).

– Four-wheelers: Rs 10,000 for every kWh of battery capacity (Maximum Rs 1.5 lakh).

The Ministry of Finance also offers programs to reduce the cost of purchasing an electric vehicle. These schemes are not covered by FAME II.

– All EVs currently are subject to a lower rate for the Goods and Services Tax (GST), at 5%

– First-time buyers may be eligible for a loan and can receive tax benefits up to Rs 1.5 million under Section 80 EEB (the Income Tax Act).

State-Wise Incentives

Delhi

Delhi was one of the first states to adopt an extensive EV policy. Delhi also has the highest density of EVs per square mile.

Two-wheelers: Rs. 5,000 per kWh battery capacity (Maximum Rs. 30,000) + scrappage benefits up to Rs. 5,000

– Four-wheelers: Rs 10,000 for every kWh of battery capacity (Maximum Rs 1.5 lakh).

– Three-wheelers, Rickshaws and Freight Carriers – Benefits up to Rs 30,000

– The state government also waived the registration fees for all-electric vehicles.

Gujarat

Gujarat’s announcement of their 2021 EV Policy, which offered a higher per-kWh Rs 1.5 subsidy lakh).

– Three-wheelers and Rickshaws – Rs 50,000.

– All vehicles are exempt from registration and road taxes

Maharashtra

Maharashtra recently revised its EV policy. It now offers several hefty benefits, including early-bird discounts for limited buyers. Maharashtra also offers a direct Rs 1.5 subsidy Lakh for the first 10,000 electric vehicles that are registered under this policy, until 2023.

Two-wheelers: Rs 10,000 per H + Rs 15,000 Early Bird Incentive + Rs 7,000 Scrappage + Other Incentives

Four-wheelers get a total discount of Rs 1.50 lakh + Rs 25,000 scrappage and a Rs 1.5 lakh early bird incentive

– Three-wheelers and Rickshaws – Maximum Rs 30,000

– All-electric vehicles are exempt from registration and road taxes

Rajasthan

Rajasthan is the latest state that has announced its EV policy. This is a little different from other states. The EV policy does not provide any direct benefits to buyers but will give them a tax credit (SGST). According to the Transport Department of the state government, the government will reimburse the SGST amount (State Goods and Service Tax) upon purchase of an EV. All-electric two-wheelers and three-wheelers will receive a lump sum grant amount based on their battery capacity. This grant amount can be used to pay for vehicles purchased between April 1, 2021, and March 31, 2022, and registered until March 20,22.

Two-wheelers: Rs 5,000 upto Rs 2kWH, Rs 10,000 upto 5 Kwh.

Three-wheeler: Rs 10,000 for battery capacity less than 3kWh, and Rs 20,000 for more than 5kWH.

Meghalaya

Meghalaya has also announced its EV policy for 2021. It has established a quota to limit the number of vehicles that can be used under the scheme. Meghalaya is also the only state that expedites the RTO paperwork for EVs.

For two-wheelers, Rs 10,000 per kWh in battery capacity

– Cars: Rs. 4,000 per kWh of capacity

– All EVs are exempt from registration and road taxes

Karnataka

Karnataka does not offer any subsidy for EV owners, but it is offering complete exemption from road taxes and registration fees.

Andhra Pradesh

Andhra Pradesh, like Karnataka, offers exemptions from road taxes and registration fees for all-electric vehicles.

Telangana

Telangana waives registration fees and exemptions road taxes for electric vehicles.

Our Word

It is great to see that the government is making real efforts in encouraging people towards EVs from the traditional IC engine vehicles because after all, climate change is real and not only that, it will also help the country economically by reducing the import bill. Do you think these incentives are enough to motivate people to purchase EVs? Should the government do more especially in terms of charging infrastructure all over the country? Let us know your thoughts in the comments section below.

2 thoughts on “Central & State Incentives on EVs – Are These Enough?”

  1. This is amazing, I really like the information above and in my opinion there is extra work needed such as making the roads better, working more on showing the positive effects of these cars on the environment and the authorities can start by that by themselves buying such cars because why not. It’s still a new idea and people are not used to it and some see them expensive but once people see its benefits they might shift into using them in the near future

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