Electric Vehicles(EVs) Subsidy and Traffic Regulations in India

Transportation Sector in India needs to undergo a major transformation. It needs to shift from an oil-based system to a more eco-friendly electric based system. Based on this consideration, the Government of India has launched National Electric Mobility Mission Plan (NEMMP) 2020. Under this plan, Faster Adoption and Manufacturing of Electric Vehicles (EVs) in India Scheme Phase II was introduced.

FAME II Scheme total budget is around Rs. 10,000 crore for a period of 3 years. 86% of the funds are fixed for Demand Incentive and it’ll used for creating demand for Electric Vehicles in the country. The creation of Charging also comes under this scheme. It can be performed through active participation and involvement of various stakeholders including government agencies, industries and Public Sector Enterprises.

Minister of Road Transport and Highway, Mr Nitin Gadkari spoke in the Lok Sabha for the same. He said this phase focuses on supporting use of electric public and shared transport. He added saying that it aims to support through subsidies. This would include 7000 e-buses, 5lakh e-three wheelers, 55,000 e-four wheeler passenger cars and 10-lakh e-two wheelers.

It also focuses on creating electric charging infrastructure to meet the range anxiety among the potential consumers of electric vehicles. These include the green or yellow background for the registration mark of these vehicles. This scheme also plans to grant a license to age group of 16-18 years for driving gearless e-scooters/bikes up to 4.0kW.

Currently, the GST on electric vehicles is 5%. Further reduction of tax is also in consideration. As a motivation for purchasing EV’s, buyers are getting discounts on the purchase price of the vehicle. The cost of batteries is one of the main factors of price difference of the EV and so the demand incentive will be based on the battery capacity.

These efforts of the central government need added support from the State Government to promote e-mobility. So far, 8 states have released drafts and final versions of their EV policies. A few other states are working on their EV policies. A few states have also introduced separate electricity tariffs for charging EV’s.

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For smooth operation and implementation of the scheme, knowledge partners, technical expertise and other logistic support shall be put in place. A suitable program will undertaken for creating consumer awareness and promotion of the scheme.

Other initiatives include exemption from the requirements of permit to battery-operated vehicles and transport vehicles running on ethanol and methanol fuels. All states and Union Territories have advised to promote the use of electric vehicles. Advisory regarding sale and registration of electric vehicles without batteries has also been issued.

Increasing EV model options, cost competitiveness, charging infrastructure, tariff and traffic regulations and raising public awareness are a few contributing factors towards EV industry development.