Tamil Nadu EV Policy

Incentives to boost demand, increase in e-buses in Tamil Nadu’s latest EV policy


The Tamil Nadu government has unveiled a new electric vehicle policy in an effort to boost the market for electric vehicles. The policy covers initiatives like battery swapping and training workers who are currently employed in the conventional fossil-fuel vehicle industry to transition to the EV industry. After the previous state EV policy of 2019 expired, the new policy was implemented. The state government has also stated support for infrastructure for charging, electric mobility in public transportation, and consumer incentives in the policy.

  1. A new Electric Vehicle Policy has been published by the Tamil Nadu government to promote the expansion of the industry in the region.
  2. The policy tackles charging infrastructure, demand side support, and staff training in addition to offering incentives to battery-swapping facilities. These are revisions to the state’s final 2019 EV Policy.
  3. According to experts, the new regulation is likely to promote electric public transportation and help with the workforce’s shift to the developing industry.

The previously offered perks for EV buyers, such as exemption from road taxes and registration fees as well as remission of permit fees, are carried over into the new policy. Together with these advantages, it also gives buyers more incentives to increase the demand for electric vehicles.

Private electric cycles and commercial electric two-, three-, and four-wheelers are recognised in the 2023 policy for incentives that will be given to consumers through direct benefit transfer. The incentive for e-cycles has been set as 20% of cost, with a maximum of Rs. 5,000. According to the policy, the reward for two-wheelers is Rs. 10,000/kilowatt-hour of battery capacity with a cap of Rs. 30,000, and for e-buses, the incentive can reach Rs. one million.

This programme tries to alleviate the low demand for EVs in Tamil Nadu by providing these incentives. Tamil Nadu is allegedly one of the states with the worst demand-side incentives for the EV sector, according to a Climate Trends analysis from February 2023 that examined the EV policies of important Indian states. The 2019 EV policy stated that 5% of public buses will be converted to electric by 2030, but by the end of November 2022, the state had not one electric vehicle on the road. The report also highlighted other gaps, such as the lower penetration of electric buses in the state.In contrast, the EV bus fleet target in the 2023 policy has been raised from the earlier 5% in the 2019 policy to 30%, and the state government expects to meet this target by the end of 2030.

Special support for battery swapping, charging infra

The state of Tamil Nadu’s new EV policy offers specific support for battery switching and charging facilities. The first 200 public battery swapping locations in the state will receive a 25% capital subsidy, according to the state. The first 200 public fast charging stations and the first 50 private e-aggregator (like food delivery firms) charging stations will each receive a 25% subsidy of the cost of equipment and machinery purchased during the policy term. The strategy also takes into account the price of the renewable energy machinery purchased for such charging stations. Companies may be eligible for subsidies if such stations get 75% of their energy from clean sources.

“Most of the incentives announced under the policy for charging stations are new and specific. The 2019 policy was more intent-oriented and suggestive. The new policy has also announced increased demand-side incentives for EV consumers. It will likely reduce the upfront cost of EVs in the consumer market. It is likely to be in addition to the subsidy consumers received under the Union government’s Faster Adoption of Manufacturing of Electric Vehicles (FAME-II) scheme,” Deepak Krishnan, Associate Director (Energy) at the World Resources Institute WRI-India, told Mongabay-India.

Sivasubramaniam Jayaraman, who works as the National Lead (Transport Systems and e-mobility) at the Institute of Transports and Development Policy (ITDP) said, “The new EV policy has given a thrust on the shared mobility segment. The government has now planned to get 30 percent of its public buses electrified by 2030. We are hopeful that with the new norms, we can also see increased penetration of electric buses and electric autos onto the roads of Tamil Nadu soon.”

Manufacturing sector assistance

According to the policy report, Tamil Nadu, a significant center for the production of important EV firms like Hyundai, Nissan, TVS, Mahindra, and Daimler, has in the meantime kept numerous elements of its previous policy to encourage supply-side assistance. Throughout the policy period, the government hopes to attract Rs. 500 billion in investments and generate 1.5 lakh new jobs in the EV manufacturing sector. Along with accelerating EV adoption in the state, it also states that it wants to become the preferred location for EV manufacturing in South-East Asia.

The new policy also intends to reimburse the State Goods and Services Tax (SGST), turnover, capital, and advanced chemistry cells subsidies in order to provide investment promotion subsidies to electric car makers (ACC). The “flexible” alternatives have been maintained by the policy, allowing the producers to select the subsidy that best suits their needs.

The government has suggested providing a 2% subsidy on the total yearly project turnover of any new or expanded EV projects under the turnover subsidy program. A 15% subsidy on the overall investment in such projects is also provided by the policy. On the other hand, people who operate in the ACC sector and make investments in the battery production industry will receive a 20% subsidy.

Another unique hand-holding support from the policy comes through a special dedicated “transition support” where the government has planned to support the companies engaged in the fossil fuel-based automobile industry but want to transition into EV production. “Transition support can be availed in the form of a Training Subsidy of Rs. 4000 per worker per month for six months for residents of Tamil Nadu. For women and transgender employees, persons with benchmarked disabilities, and persons from SC/ST communities, the training subsidy shall be Rs. 6000 per worker per month for six months,” the report said.

Siddharth Goel, Senior Policy Advisor at the International Institute for Sustainable Development (IISD), told Mongabay-India, “Compared to EV policies in other states, Tamil Nadu earlier provided lower demand-side support, which the new policy has tried to rectify. In addition, the new policy has a positive focus on recycling used EV batteries for reuse. The provision of a single window, dedicated EV cell in the state is also likely to facilitate increased investment in the sector.”

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