Central government policy about 4W electric vehicles (EVs) in India

India faces challenges with traffic, pollution, and energy use due to its growing population and cities. Moving to electric vehicles (EVs) is key to a cleaner and sustainable future. The central government has set up rules and plans to support the EV industry, especially focusing on 4-wheelers.

Union Budget 2022-2023

The 2022-2023 Union Budget, the annual budget of India,  highlighted e-mobility and clean energy as priorities for a sustainable future. In the 2023 budget, customs duties on machinery for making lithium-ion batteries for EVs were removed, which will make EVs cheaper. The National Green Hydrogen Mission, with a budget of INR 19,700 crores(USD $2.4B), will help reduce carbon emissions and cut down on fossil fuel imports. Following the 2021-22 Budget, funds have been allocated to scrap Central Government vehicles older than 20 years, and states will get support to replace old cars and ambulances.

National Electric Mobility Mission Plan (NEMMP)

Introduced in 2013, the NEMMP provides a comprehensive roadmap for the accelerated adoption and manufacturing of electric and hybrid vehicles in India. The mission aims to ensure national fuel security, envisioning a significant reduction in the country's crude oil consumption. The plan also focuses on fostering research and development in the EV sector, with an investment projection of around INR 14,000 crores (USD $1.7B). The plan is projected to save 9500 million liters of crude oil which is equal to INR 62,000 crores. Under NEMMP, the government had also launched the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME India) scheme to promote the manufacturing of electric and hybrid vehicle technology to completely achieve electrification by 2030. 

FAME-I

The FAME (Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India)  is a financial incentive scheme that falls under India Scheme Phase I which began in 2015 and concluded on 31 March 2019. This initial phase was a governmental incentive scheme designed to bolster the production and promotion of electric and hybrid vehicles in India. The central government allocated and utilized funds for this phase that were directed toward enhancing electric vehicle production, infrastructure development, and promoting sustainable transportation in the country.

The FAME I initiative focused on four key areas: demand creation, pilot projects, technological development, and the establishment of charging infrastructure. Initially, the program was ambitiously set with a goal of achieving 100% e-mobility by 2030. However, in March 2018, this target was revised to a more realistic 30% e-mobility by 2030. The Ministry of Heavy Industries had sanctioned 520 Charging Stations/ Infrastructure under the Phase-I of FAME India Scheme. As for the incentives for the customers, for 4-wheelers intended for commercial use, the incentive is the lesser of INR 10,000 (USD $120) per kWh or 20% of the vehicle's cost. This approach ensures that consumers receive benefits that align with the vehicle's battery capacity, promoting the adoption of electric vehicles.

FAME-II

The FAME India Scheme Phase II commenced on 1st April 2019 and will run for 5 years. This phase emphasizes the continued promotion of electric and hybrid vehicles in India. The central government has allocated substantial funds for this phase which aims to further the objectives of enhancing electric vehicle production, developing infrastructure, and promoting sustainable transportation solutions in the EV scheme in India

FAME II was unveiled in April 2019 with a substantial budget allocation of INR 10,000 crore (USD $1.2B), equivalent to approximately US$1.2 billion. This initiative has capped the support provided in each category. The cap is at the deployment of 7,090 e-buses and 55,000 lakh 4-wheeler vehicles. For e-buses, total fund support is INR 3545 crore (USD $425M). For the 35000 lakh (3.5B units)  E-4-wheeler, the budget set is INR 525 crore (USD $63M). Originally set to expire in 2022, the program's duration was extended to run through March 31, 2024. This ministry has also sanctioned 2,877 Electric Vehicle Charging Stations in 68 cities across 25 States/UTs and 1576 charging stations across 9 Expressways and 16 Highways under Phase II of the FAME India scheme. The latter encompasses efforts to educate the public about electric mobility and the operational costs of running the FAME program.

Production Linked Incentive (PLI) scheme for Advanced Chemistry Cell Battery Storage (PLI-ACC scheme):

The PLI (Production Linked Incentive) Scheme was launched in June 2021 and is a financial initiative aimed at boosting the manufacturing industry of various sectors including the electric vehicle (EV) sector. It aims to attract investments in giga-scale ACC manufacturing facilities in India. ACC batteries are used in a variety of applications, including electric vehicles, energy storage systems, and consumer electronics. Benefits under this scheme include direct subsidies to EV purchasers and extend to the cell battery and vehicle component industries. With a total allocation of INR 18,100 crore (USD $2.2B), payouts are spread over five years, contingent on the operational status of the production plant. To qualify, plants must be operational within two years, and a 60% domestic value addition is mandated within five years.

Other policies and Incentives at the central level

Introduced in December 2021, the Battery Swapping Policy promotes quick battery exchanges for EVs, eliminating long charging waits. Special Electric Mobility Zones (SEMZs) provide incentives like tax reliefs and discounted parking for EV adoption. The GST on EVs has been cut from 12% to 5%, and electric buses hired by local authorities are GST-exempt. Central government initiatives for EVs include an incentive of INR 10,000 (USD $120) per kWh of battery capacity for 4-wheelers, capped at INR 250,000, with an additional INR 100,000 (USD $1200) early bird bonus until 31 March 2022. There's also an INR 25,000 scrapping incentive and a full road tax exemption for EVs. 

Conclusion

The central government's commitment to promoting e-mobility is evident in its comprehensive policies and initiatives. With the dual objectives of environmental conservation and fuel security, the push for EVs is set to transform India's transportation sector. The incentives and support mechanisms in place are expected to drive rapid EV adoption, making India a significant player in the global EV landscape.

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