EV Manufacturers Optimistic About New EV Policy Announced by Tamil Nadu

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Last month, when most States began the year on a note of optimism around EVs, uncertainty loomed large over Tamil Nadu’s EV sector. The State, which had offered multiple incentives for EVs, fell silent on the extension of the same, which concluded on December 31, 2022. This, of course, was followed by worry from EV makers, who seemed perplexed over the future sale of EVs in the State. Now, all the worries have been put to rest with the Tamil Nadu Government introducing a new EV policy 2023. We break down the mandates of the policy for you:

What’s in store for manufacturers 

• The new policy will provide incentives to manufacturers, customers and providers of EV charging infrastructure.
• The Tamil Nadu EV Policy 2023 will make 100 per cent reimbursement on State Goods and Services Tax (SGST) a reality.
• Subsidies on investment will be welcomed, these could be turnover-based subsidy, and even advanced chemistry cell subsidy.
• For a period of five years, the State of Tamil Nadu will completely exempt tax on electricity purchased from its DISCOM. Additionally, stamp duty will be done away with while the land cost will also be subsidised. This will give impetus to manufacturing.
• Aggregators will be encouraged to join hands with e-mobility providers and EV manufacturers for ICE vehicles to be phased out from fleet.

Electrification of public transport

• The policy also looks at electrifying its public transport. Electrification of fleets via loan programmes from multilateral agencies will be one of the many goals. The State has also set sights on augmenting the share of electric buses to 30 per cent of the fleet by year 2030.

What’s in store for buyers

• Allaying fears that reigned over the sector until recently, 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.

Push to charging infrastructure

• Budgetary outlays will be announced for bus-charging infrastructure. The option providing infrastructure as a service for private operators will be looked into.
• 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.
• A capital subsidy of 25% will be given to the the first 50 private charging stations.
• The tariff for public charging will also see revisions.

The industry seems unanimously jubilant about the new EV policy introduced by Tamil Nadu, which sets a precedent for other states to follow. The Society of Manufacturers of Electric Vehicles, which represents manufacturers in the sector, has voiced its approval of the policy, says Sohinder Gill, Director General, SMEV, “We welcome the new EV policy announced by the Tamil Nadu government. The policy’s focus on building a robust ecosystem for EV manufacturing, charging infrastructure, and incentives for customers will help accelerate the adoption of electric vehicles and create a conducive environment for manufacturers to invest and expand their operations in the state.” Over the last five years, the EV projects in the state have created employment opportunities through 48,000 jobs. The announcement of the policy further paves the way for this, “This increased manufacturing capacity will create job opportunities for local communities driving holistic economic growth. The policy’s comprehensive set of incentives for EV manufacturers and customers, including tax exemptions, investment-based subsidies, and purchase incentives, will undoubtedly accelerate the adoption of electric vehicles in the state. The state plans to develop a robust charging infrastructure that would certainly clear the range anxiety issue of potential EV buyers.” The policy, which focuses on electrification of its fleet has been applauded by the stakeholders, “We are particularly impressed with the government’s commitment to gradually shift a significant portion of its public transport fleet in transforming vehicles of schools and colleges to EVs, which will have a positive impact on the environment. We are excited about the opportunities this policy presents and look forward to working closely with the government to drive the growth of the EV industry in Tamil Nadu, he concludes.

“The new policy unveiled by State is eyeing Rs 50,000 cr worth of investments in the EV. The State thus hold immense potential to be a lucrative destination for investment as far as electric vehicles are concerned. “In line with the global pursuit to reduce carbon emissions, India also encouraged EV adoption throughout the nation to focus on sustainable and clean mobility solutions with subsidies and supportive regulations. Following the path, various states in the country are coming forward to introduce their own policies for the EV sector. The latest EV policy by Tamil Nadu offers various incentives which will put an order and support local players to uplift the EV sector in the state. It will also attract players from other states to consider Tamil Nadu as their next destination for businesses in the EV sector,” stated V G Anil, Head of Operations, ARENQ- a manufacturer and distributor of storage batteries.

Kaustubh Dhonde, Founder & CEO of AutoNxt Automation, an automation technology startup, is of the view that Tamil Nadu, is poised to be a great destination for investment, not just because of the Rs 50,000 crore investments and  the generation of 1.50 lakh jobs that the state will witness, but also because of its “strategic position”. He says that the State’s “geographic position with the long coastal belt allows for the import of key components and export of finished goods” but also offers an “abundance of engineering talent and skilled labour required for manufacturing of EVs. This will certainly create a lot of jobs and train the local people to acquire the necessary knowledge to build and service an EV which is the future of mobility. With such state policies, India will soon become a leading EV exporter in the world,” he is convinced.

Rohil Gupta, Co-Founder & CTO of Hop Electric Mobility- an electric two-wheeler manufacturer,  terms the policy as “a progressive initiative by the esteemed State Govt’s policy makers, encompassing all stakeholders in the EV Eco-System.” He further says, “The policy framework will go a long way in enabling the transition to electrification of the various mobility platforms across B2B and B2C segment; a boost for OEMs, Components’ manufacturers/ ancillaries, fleet operators and customers, etc.. to whole-heartedly invest and adopt sustainable, efficient mobility. We see this as a comprehensive green sustainable climate conscious approach aimed at growth focused bright future for the electric vehicle segment.”

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. Ola Electric, Ather Energy and Simple Energy are some of the EV makers who are setting up units on large scale in the industrial belts of Tamil Nadu. For leading EV manufacturer Ather Energy, Tamil Nadu is among the top performing markets, informs the firm.