How State EV Policies Are Boosting EV Startups In India

The Union Budget 2022 emphasised the importance of emobility, boosting EV adoption across the country to focus on sustainable and clean mobility options. Sustainable development models, with a greater emphasis on renewable energy sources to combat climate change, are one of the critical steps toward making India’s automotive industry globally competitive. 

This will result in increased value addition in the country, boosting manufacturing and creating significant additional jobs. Regulation, customer behaviour, and technology are the primary drivers of the fundamental revolution in sustainable and clean mobility.

Our government has enacted several laws and policies to encourage the production and use of electric vehicles. This has resulted in positive outcomes and increased EV penetration in the Indian market. Several criteria for the country’s rapid adoption of EVs require proper infrastructure, legislation, and policies. 

These characteristics should be strengthened further by establishing and implementing a comprehensive framework for EVs in the country. Various laws and regulations within this framework should encourage the country’s faster adoption of EVs by providing an affordable, dependable, safe, and accessible infrastructure and environment.

Indian States’ Bid To Support EV Startups 

The abrupt shift to technology and electrification in the automobile industry is very visible, but growth in India has been much slower than in the rest of the world. The federal government issued the FAME (Faster Adoption and Manufacturing of Electric Vehicles) policy in 2015 to address this issue, followed by the FAME II policy in 2019. 

To seize this golden opportunity, several state governments are rushing to declare their respective state EV policies, which are intended to encourage the adoption and manufacturing of EVs. Many Indian governments, including Maharashtra, Delhi, and Gujarat, are providing significant incentives to EV customers, lowering the upfront cost of electric vehicles so that they can compete with their ICE (internal combustion engine) counterparts.

These state government subsidies are in addition to those provided by the Centre under the FAME II plan. Many state governments are imposing additional road fees on ICE vehicles, a green tax on re-registration of old vehicles, different penalties and taxes on gasoline and diesel, and an ICE congestion fee. 

Several southern states, on the other hand, are focusing on electric vehicle development. Many governments, including Tamil Nadu, Andhra Pradesh, Telangana, and Karnataka, are attempting to entice investment from EV manufacturing businesses over the next few years by offering tax breaks, capital investment incentives, and lower power tariffs.

The battle for EV policies among states is a positive sign for the sector as India strives to reduce its reliance on fossil fuels. This EV adoption will help to reduce greenhouse gas emissions by approximately 35% from 2005 levels over the next nine years to meet global climate targets. 

India’s Shift To EV 

Despite the economic downturn caused by the Covid-19 epidemic, EV sales increased last year. In the current fiscal year, India sold 1.04 lakh electric vehicles, while total registrations were 5.17 lakh in the previous 3.5 years. Between 2001 and 2017, Indian vehicle ownership increased more than threefold. Today, two-wheelers account for more than 80% of all vehicles in India. This segment will drive the change. 

The Central Government has extended its Faster Adoption and Manufacturing of Hybrid and Electric Vehicles scheme until 2024, with a total budgetary outlay of Rs 10,000 crore. The government is assisting this industry by encouraging manufacturing, R&D, subsidies, and scrapping. They are also investing in battery manufacturing and charging infrastructure development. 

The government established the National Electric Mobility Mission Plan 2020 (FAME India) to accelerate the use and manufacturing of (hybrid and) electric vehicles in India. The transition to clean transportation is critical because automobile pollution is wreaking havoc on the environment. 

The NEMMP aims to invest approximately INR 14000 crores in R&D initiatives and emerging technologies, to accelerate the adoption of electric vehicles, and to build critical infrastructure through public-private partnerships. The potential target and objectives of the NEMMP were established by the Ministry of Heavy Industry under the Government of India. This was accomplished after a thorough examination of the potential interventions, which included focus group discussions, expert opinions, existing literature, international studies, and primary research conducted by the consulting firm Booz & Company.

Facilitate Charging Infrastructure

For many years, electric vehicles have been gaining popularity due to lower maintenance costs, lower fuel prices, and environmental friendliness. People are already making the switch to electric vehicles, but more infrastructure is required. Various national and state government EV policies must direct and promote research, charging infrastructure, and appropriate skill development techniques. We need an EV policy that helps to create a favourable environment for the transition from internal combustion engines to EVs. We need effective policies that prioritise EV research and development.

Several states have adopted electric vehicle policies to supplement national electric mobility plans and to promote futuristic sustainable transportation. Approximately half of the Indian states have their own EV policies. EV policies include monetary incentives for EV purchases, exemption from road tax, car registration fees, and lower interest rates on EV loans. It also includes efforts to encourage public transportation and last-mile delivery companies to purchase more electric vehicles. Not to mention, infrastructure is being built for EVs, including facilities for manufacturing batteries, charging infrastructure, and scrapping.

The long-term sustainability of EVs can be improved by offering fiscal and non-fiscal incentives. Regulations must be drafted to allow gas stations to freely put up charging stations. Another key challenge for EV producers is the safe disposal of batteries. Although the government is creating guidelines for battery recycling practices and providing financial incentives to companies that build recycling facilities, the process needs to be sped up.

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