The Indian government is consistently demonstrating its commitment to making India a global leader in the electric vehicle industry. The government has introduced a number of programs and incentives to encourage manufacturers to invest in the R&D of electric vehicles and associated infrastructure, as well as to increase demand for electric vehicles.
The government of India has launched so far – FAME-II, PLI SCHEME, and Battery Swapping Policy, Special Electric Mobility Zone, Tax Reduction on EVs.
Following are the government Policies and incentives for electric vehicles in India.
Table of Contents
- FAME-II
- PLI SCHEME
- Battery Swapping Policy
- Duty Reduction on Electric Vehicles
- Special E-mobility Zone
FAME-II
The Indian government started the FAME India campaign on April 1, 2015, with the goal of lowering the number of cars that run on gasoline and diesel. An integral component of India’s electric mobility was this scheme. All kinds of vehicles are intended to be encouraged by the FAME India Scheme.
The Fame India Scheme has the following four focal areas:
- Demand for technology,
- Pilot Projects,
- Technology development,
- Infrastructure for Charging.
With a budget of Rs 10,000 crore, the FAME II scheme was unveiled in April 2019 with the goal of supporting a million e-two-wheelers, 7,000 e-buses, 55,000 e-three-wheelers, and 5,000 e-passenger vehicles. The intention was to increase EV adoption in India.
The plan was set to expire in 2022. However, the Indian government has now decided to extend the FAME-II program through March 31, 2024, as stated in the budget for FY2022-23.
PLI SCHEME
The Department of Heavy Industry introduced the PLI-ACC Scheme, or Production Linked Incentive for Advanced Chemistry Cell Battery Storage, in June 2021. Its objective is to attract both local and foreign investors to India’s Giga scale ACC manufacturing facilities. One of the thirteen programs that the Union Government has approved to help the Prime Minister achieve his vision of “Atmanirbhar Bharat” is the PLI-ACC Scheme.
The total payout for the scheme is INR 18,100 crore. This will be paid for over a period of five years following the start-up of the production facility. The Bid Documents state that a 60 percent domestic value addition must be accomplished within five years of the manufacturing facility becoming operational, as per the policy’s requirements for eligibility for subsidies.
Strict selection criteria prevent many small and mid-sized companies that produce EV batteries and auto parts from applying for the benefits of the program. In order to close the industry’s demand-supply imbalance, smaller businesses are essential. The EV community will be enhanced by adjusting current standards or suggesting an alternative to make the plan a practical option for these companies.
Battery Swapping Policy
The government plans to implement a policy for battery swapping, according to the minister of finance. With the help of this program, battery standards for EVs will be uniform throughout India. The law will support the use of EVs in time-sensitive service industries such as intercity transportation and deliveries, since it is more convenient to replace a depleted battery with a fully charged one rather than attempting on-the-spot recharging, which can take hours.
That will simplify interoperability. Customers do not need to worry when changing their batteries or about the configuration of the new batteries being installed if all the batteries are the same for all the same categories of EVs.
Battery switching is predicted to gain traction in commercial applications like 2W and 3W vehicles and accelerate market penetration if done correctly.
Continue reading about Battery Swapping Station Prices and Indian Companies.
The manufacturers stand to gain from the Battery Swapping Policy as well. Machine spare parts will also be easier to find after the standards are implemented. Furthermore, this strategy will help battery manufacturers cut costs by utilizing economies of scale.
Duty Reduction on Electric Vehicles
A proposal to reduce customs duties on nickel oxide from 10% to 0%, nickel ore and concentrates from 5% to 0%, and ferro nickel from 15% to 2.5 percent is included in the budget. An essential component of lithium-ion batteries, which power electric cars (EVs), is nickel manganese cobalt (NMC).
India is heavily dependent on these ores for the production of batteries, but its reserves are limited. Thus, the majority of nickel alloys are imported. Reduced customs taxes will assist local manufacturers of EV batteries in cutting their manufacturing costs.
To further reduce the overall cost of EVs, a proposal has been made to reduce customs duty on motor parts from 10% to 7.5 percent.
Special E-mobility Zone
The government intends to create zones specifically designed for electric car mobility. Only electric or similar vehicles will be allowed to operate in the administration-designated zones. China and several European nations both have similar policies in place.
One unintended advantage of designated electric mobility zones is that they will lessen traffic congestion caused by private automobiles. People must either drive their own EV or use a public EV vehicle to get through these zones, which increases the market share of EVs.
Summary
People in all areas, professions, and ideologies are passionate about electric cars. In the future, electric vehicles (EVs) will be a trillion-dollar industry that also contributes to environmental rescue.
Due to their widespread use and abundance, electrified vehicles are essential to quickly decarbonizing transportation in developing countries. The government’s involvement thus becomes crucial. The effects of incentives are readily apparent in government subsidy programs.
There are other ways to increase sales of electric vehicles besides government incentives. As previously mentioned, manufacturers have practical implications in addition to changing customer behavior. Effective actions show how governments can help in resolving these issues. We hope that India can keep moving forward on its path to a greener future with the help of the government’s initiatives.