As More States Define EV Policies, Consistency and Relevance Key To Impact-Climate Trends

Enabling policies both at national and state level have made the environment conducive for e-mobility in India. The figures speak for themselves. Of the 36 states and Union Territories in the country, 26 have released EV policies over the last 5 years, with 16 of them being released between 2020 and 2022.

A study by Climate Trends, ‘Analysis Of State Electric Vehicle Policies And Their Impact’ takes a look at these policies based on comprehensiveness of these state EV policies based on 21 parameters that cover targets and budget allocations, demand side and manufacturing incentives, and focus on fleet electrification, charging infrastructure mandates and job creation. The report also analyses the progress of 8 policies that have been active for two years or more. It shows that most states are not on track to meet their targets of EV penetration, charging infrastructure or investments.

While considerable progress has been made on this front, there are gaps in implementation, leading to slower on-ground impact, necessitating better regulation, improved monitoring, mechanisms and capacity building of stakeholders across the policy value chain.

Lack of policy parity

There are discrepancies in state-level EV policies.

Maharashtra, Haryana, Uttar Pradesh, Delhi and Punjab offer the widest range of parameters, between 13 to 15 of the 21 parameters, making them the most holistic policies. Maharashtra was among the states in India that notified a policy on electric vehicles. In a lucrative announcement, for electric 2-wheelers, the first 100,000 units to be sold would qualify for subsidies – an incentive of ₹5,000 per kWh of battery capacity – a maximum of ₹10,000. For electric 2-wheelers, the first 100,000 units to be sold would qualify for subsidies – an incentive of ₹5,000 per kWh of battery capacity – a maximum of ₹10,000. There was an early bird incentive of up to ₹15,000 for an electric 2-wheeler with a 3 kWh battery until the end of 2021. A ₹7,000 scrappage is also applicable for an electric 2-wheeler in the state.

Haryana Government also provides incentives for both – EVs as well as Hybrid EVs (HEVs).

On the flip side, major laggards are Arunachal Pradesh, Manipur, Himachal Pradesh, Ladakh, Kerala, and Uttarakhand offer between 3 to 7 of the 21 defined parameters in their policies, making them the least comprehensive.

A few states in the north-eastern region have not even yet come up with an EV policy. While some states announced their EV policies as far back back as 2020, and constantly continue to update them, other states  Ladakh’s EV policy was announced in August 2022.

The PLI Scheme and FAME are the two policies that have catapulted India’s EV sector for a meteoric rise.

Even though eight states released their policies before October 2020, none are on track to meet their targets. These are  Andhra Pradesh, Bihar, Karnataka, Kerala, Madhya Pradesh, Tamil Nadu, Telangana and Delhi.

Demand side incentives

Nine states and UTs – Delhi, Odisha, Bihar, Chandigarh, Andaman & Nicobar, Maharashtra, Haryana, Rajasthan and Meghalaya – offer 5 to 6 out of 8 forms of demand side incentives.

In May 2022, Delhi became India’s first state that introduced and incentivised e-cycles in the EV policy. It was also among the firsts that introduced incentives for buyers buying EVs. As per the policy, e-cargo cycles are eligible for a purchase incentive of 33% of the e-cycle price.

Nine states – Andhra Pradesh, Arunachal Pradesh, Manipur, Karnataka, Himachal Pradesh, Gujarat, Madhya Pradesh, Tamil Nadu, Kerala – offer only one or two demand side incentives.

Manufacturing incentives

Tamil Nadu, Haryana and Andhra Pradesh have the strongest supply side incentives, with special support to boost EV manufacturing, apart from incentives offered in the state’s industrial policy.

Tamil Nadu recently introduced its EV policy, which could further prove to be a boon for customers and manufacturers. Among other announcements made for manufacturers, aggregators will be encouraged to join hands with e-mobility providers and EV manufacturers for ICE vehicles to be phased out from fleet.

Firm that set up public charging stations in the State stand to benefit from the policy as they will be eligible for a 25% of the cost involved with respect to purchase of machinery and equipment.

For buyers, on the other hand, the policy provides exemptions and waivers will be provided on road tax, registration charges along with permit fees for EV users. Purchase incentives from Rs 5,000 and Rs 10 lakh will also be given to buyers. Tamil Nadu’s trajectory as an EV maker has been impressive over the last few years. A slew of policy announcements and with manufacturers making headways into the State has transformed it into an EV ecosystem hub.

Push to charging infrastructure

Only 9 states have mandated the creation of charging infrastructure in new residential buildings, offices, parking lots, malls, etc: Chandigarh, West Bengal, Andhra Pradesh, Tamil Nadu, Odisha, Delhi, Maharashtra, Meghalaya, Ladakh. In Chandigarh, for instance, in order to facilitate establishment of EV Charging infrastructure in housing societies, offices and other places for private/semi-private usage, CREST has come up with an IT based platform.

Fleet Electrification

As per the study, only 8 states have specific targets for electrification of fleets such as last mile delivery vehicles, aggregator cabs, government vehicles: Maharashtra, Delhi, Haryana, Karnataka, Assam, Madhya Pradesh, Manipur, Andaman & Nicobar. Assam, for instance has set itself a target of electrifying its fleet by 2030.

In Andaman & Nicobar, work on electrification of fleet has also gained momentum. In 2021,14 e-buses were flagged off.

Other Findings

EV penetration is below target: Madhya Pradesh aims for 25% of all new registered vehicles to be electric by 2026, but its current penetration stands at 2.2% of total vehicle sales since policy launch. Delhi’s EV penetration stands at 7.2% against its target of 25% by 2024. Tamil Nadu has no defined target but EV penetration is a mere 2.02% of registered vehicles.

Electrification of public transport lagging: Across all 8 states, penetration of electric buses is far below policy targets. Tamil Nadu aims for 5% of buses to be electric, but has no e-buses on ground yet. Kerala aims for 6,000 buses by 2025 but has only 56 on ground.

Charging infrastructure growth is slow: Delhi, with the highest charging stations and points, has only made it to 9.6% of its 2024 target of having 30,000 charging stations. In all other 7 states, publicly available data shows public and semi public charging stations to be between 100 to 500 only.

No progress on green zones: Seven states aimed to create green zones either under their Smart Cities Initiative, but none have progressed on this so far.

Bihar is the only state that has achieved its overall EV penetration target of 1,00,000 EVs by 2024. However, this is mostly due to an increase in sales of EV three wheelers. All other vehicle segment targets such as two
wheeler, four wheeler and e-buses are far behind

The report suggests that states take a hard look at their policy designs in order to make them more comprehensive and well balanced for the growth of EV sales and overall EV ecosystem. It also recommends them to have a longer term vision till 2030. Additionally, it suggests greater focus on fleet electrification through mandates for cab aggregators, last mile delivery service and e-commerce companies. Electrification of public transport will be key for zero emissions transport, and all policies must build in mechanisms to achieve their bus electrification targets. And finally, the lack of on-ground progress in policies active for 2 years or more, highlights the need for monitoring policy implementation, to achieve greater impact, and recognise opportunities to course correct and revise policies.

Pawan Mulukutla, Director, Integrated Transport, Electric Mobility and Hydrogen, WRI India, points out, “Till now, about 25 states/UTs have notified their EV policies while another 4-5 policies are in the draft stage. Clearly, there is a strong appetite for change at the state level. The critical need now is effective design and implementation of these policies that take into account the specific and unique characteristics of each state. We also need replicable models that can be modified by states to suit their requirements and scale adoption. To accelerate adoption at the sub-national level, we urgently need several institutional frameworks and governance structures in place. For instance, a city-level EV cell, on the lines of Mumbai EV Cell, will be beneficial to track and catalyze the overall growth of the sector at a granular level. We must also explore cross-sectoral collaborations and partnerships that leverage the strengths of each sector to spur growth.”

Lack of financing and access to it continues to be a major headwind for the EV sector to encourage adoption of electric vehicles. He concludes, “Exploring ways to leverage private sector financing for EV adoption is another critical requirement at this juncture. We also need to closely analyze the state of readiness of the supply side to ensure that the emerging models are in line with customer requirements and expectations. Lastly, to encourage adoption at the sub-national level, regulatory mechanisms in the form of mandates (for instance, ZEV mandates) will be critical. A strong impetus to state-level action is imperative to elevate India’s e-mobility trajectory and ensure that we are on track to achieving the national target of 30% EV market share by 2030.”

Siddharth Goel, Senior Policy Advisor at the International Institute for Sustainable Development voices support for accelerating deployment and attracting manufacturing investment.” He places an emphasis on enhancing “public accountability by highlighting the progress that states have made towards their stated EV targets. In the future, states should take into consideration their unique competitive advantages when designing EV policies. IISD’s research, based on consultations with investors, has found that states need to accelerate support for charging infrastructure and provide renewable energy supply to charging stations to attract international investment into their EV ecosystem.