EV Policies and Incentives in India

We have seen in the last few years that the electric vehicle market has expanded substantially. China is the leader in the electric vehicle industry and has done some extraordinary developments. Developments have been made in terms of battery manufacturing capabilities, model development, charging infrastructure, and many more. China offers electric vehicles at a much lower price due to its large manufacturing capacity. In this article, we will discuss EV Policies and Incentives in our country.

If we talk about India, we are far behind in terms of market penetration of electric vehicles. Our country has a much lower acceptance rate when it comes to electric vehicles. There are several other factors and segments where development is required. Factors in terms of model developments, infrastructure for charging, financial incentives which are given to manufacturers, and many more.

Current Market Scenario

Looking at the current scenario, we are the leaders in the two-wheeler and three-wheeler electric market segment in the world. In terms of passenger autos and commercial vehicles, we are in the top 5 in the world. Despite being on top in every segment, we have only registered 1,04,806 electric vehicles in the last 2 years.

The common people of India are gradually accepting electric vehicles for their daily use. People are accepting electric buses as a daily mode of transport and last year around 3,000 units of electric buses were sold and is expected that this number will rise in the next 2 – 3 years.

Government EV Policies and Incentives

The Government of India is making policies to support the electric vehicle manufacturers as well as the customers by providing them incentives and subsidies which will help India become a global leader in the electric vehicle sector. The Indian government is consistently showing its support and efforts to make India a world leader in the EV industry. The government has introduced a number of programs and incentives to increase consumer demand for electric cars and to encourage automakers to invest in the R&D of electric cars and related infrastructure. FAME-II, PLI scheme, Battery Switching Policy, Special Electric Mobility Zone, and Tax Reduction on EVs are the current initiatives of the Indian government.

Across all geographical, industrial, and philosophical boundaries, people are accepting electric vehicles. Future EV sales will reach trillion-dollar levels while also saving the environment. Given their widespread use and popularity, the electrification of automobiles in emerging countries is essential for the rapid decarbonization of transportation. The involvement of the government is therefore essential. The effects of incentives and government subsidy schemes are clearly seen in the sales of electric vehicles. Government subsidies aren’t the only option to increase the sales of electric vehicles. Practical consequences include changing the behavior of manufacturers as well as consumers is also an important part. We anticipate that the government’s initiatives will help India advance toward a more sustainable future.

Government Schemes

PLI Scheme– The Production Linked Incentive for Advanced Chemistry Cell Battery Storage (PLI-ACC Scheme) was introduced by the Department of Heavy Industries in June 2021. The organization’s objective is to persuade both domestic and foreign investors to make investments in India’s Giga scale ACC manufacturing plants. PLI-ACC Scheme is one of the thirteen programs approved by the Union Government to support the Prime Minister’s vision of “Atmanirbhar Bharat”. The total payout under the scheme is INR 18,100 crores. Money will be paid over a five-year period from the start of production. According to the policy, in order to qualify for subsidies, the manufacturing facility must be operational for the last two years. The Bid Documents further state that a 60 percent domestic value addition must be accomplished within five years from the starting date.

FAME-II – FAME II is the second phase of a three-year compensation scheme. It seeks to encourage the electrification of shared and public transportation, including the 7,000 electric and hybrid buses, 5,00,000 electric three-wheelers, 55,000 electric four-wheeler passenger cars, and 1 million electric two-wheelers.To decrease the use of gasoline and diesel vehicles, the Indian government established the FAME India project on April 1, 2015. This program was crucial to India’s adoption of electric mobility. With a budget of Rs 10,000 crore, the FAME II scheme was launched in April 2019. The goal was to encourage wider EV usage in India. In 2022, the plan was intended to be completed. But recently, the Government of India has decided to extend the FAME-II scheme till 31 March 2024.

Some Other EV Policies and Incentives Schemes

Special E-Mobility Zone – The government intends to create designated electric vehicle mobility zones in the country. In these particular areas, only electric or equivalent cars will be allowed to operate. Many European nations and countries like China have such rules and zones in place. Special Electric Mobility Zones will have the unintended effect of reducing congestion brought on by private vehicles. Individuals passing through these zones must drive their own EVs or board a shared EV. This will boost the market share of EVs.

Duty Reduction on Electric Vehicles – A proposal is given to reduce customs charges on nickel concentrates, nickel oxide, and ferronickel. An essential component of lithium-ion batteries, which are used in electric vehicles, is nickel manganese cobalt (NMC). These ores are scarce in India, and battery production is heavily dependent on them. Hence, the majority of nickel alloys are imported. Local manufacturers of EV batteries will get great relief after the reduction in customs taxes. A plan to cut the tariff on motor parts from 10% to 7.5% will bring down the overall cost.


So, these are the EV Policies and Incentives in India. All these are intended to boost the manufacturing and sale of electric vehicles. This will help build a world-class ecosystem of electric vehicles. With this, we are hoping that we may achieve the target of EV 30@ 30.

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