State-Wise EV Subsidies in India - Blogs

This article provides details about the state-wise EV subsidies In India, the Electric Mobility Promotion Scheme, its aims, objectives, etc.

With India’s growing population, the government is focusing on promoting electric vehicles (EVs) and building a sustainable transport sector. To achieve this, the government has launched the Electric Mobility Promotion Scheme (EMPS)-2024 to promote electric mobility in India and strengthen the electric vehicle manufacturing ecosystem.

State Support for Electric Vehicles

While the central government provides support for electric vehicles under the National FAME II Programme, each state has its policies to make electric vehicles a mainstream alternative. Each state has its criteria for supporting electric vehicles. So which Indian states offer the most generous benefits on the purchase of an electric vehicle? Let’s take a look.

a) Government Incentive Support for Four-Wheel Electric Vehicles

Electric vehicles have larger batteries and are eligible for significant government incentives such as the Electric Vehicle Incentive. Government EV programs also offer state-wise EV subsidies In India for electric cars and sports utility vehicles (SUVs).

However, the total number of vehicles covered by these programs is significantly reduced. Most states limit the total number of electric vehicles eligible for state-wise EV subsidies In India to 10,000. Apart from the national FAME II program, each state has its own e-mobility strategy and subsidy requirements for electric vehicles.

Therefore, the incentives offered by the government vary from state to state.

b) Government Incentive Subsidy for Electric Vehicles for Two-Wheelers

The Government Electric Vehicle Policy is designed for 4-5 years from the date of notification. It subsidizes only a certain number of vehicles. Most states in India have agreed to allocate state-wise EV subsidies In India for electric vehicles (two-wheelers eligible for incentives under the FAME II scheme) based on the size of the lithium-ion battery.

Electric two-wheelers are eligible for government subsidies for electric vehicles, just like electric cars and SUVs.

What is the FAME subsidy for electric vehicles?

FAME (Fast Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India) is a government subsidy incentive scheme for electric vehicles. The EV incentive programme was launched in 2013 as part of the National Mission on Electric Mobility 2011/National Electric Mobility Mission Plan 2020.

The key features of the subsidy are:

The first phase of the FAME I programme was approved for two years from April 1, 2015. Since then, the EV subsidy programme has been extended periodically.
The first phase of FAME was last extended to March 31, 2019.
The FAME program uses the Demand Incentive Payment Mechanism (DIDM).
The government support level for electric vehicles for each vehicle category (pure electric, hybrid, etc.) has already been determined based on technology and battery parameters.

What is FAME II Funding for Electric Vehicles (FAME 2)?

FAME II is the second phase of the Electric Vehicle Support Program that came into effect on April 1, 2019. In early April 2019, the government launched a three-year stimulus programme with a budget of Rs 10,000 crore. Highlights of FAME II include:

FAME II subsidy for electric vehicles is expected to cover 7,000 electric buses, 500,000 electric three-wheelers, 55,000 electric cars and 100,000 electric two-wheelers.
EV subsidy scheme extended till March 2024.
Increased subsidy for electric vehicles (two-wheelers) is one of the key incentives of the new FAME II scheme.
Subsidy for two-wheelers was initially Rs 10,000 per kWh.
It has now been increased by 50% to Rs 15,000 per kWh.
Additionally, the funding cap for electric vehicles has been increased from 20% to 40% of the vehicle cost.
Subsidy for electric vehicles (four-wheelers) remains at Rs 10,000 per kWh.
Subsidy for electric vehicles is up to Rs 1.5 lakh.

What is the Electric Mobility Promotion Scheme (EMPS)-2024?

The Ministry of Heavy Industries (MHI) of India launched the Electric Mobility Promotion Scheme (EMPS) in March 2024. It aims to promote the adoption of two- and three-wheeled electric vehicles for commercial purposes and provide the necessary support for the development and manufacturing of electric vehicles in India.

EMPS-2024 will run for four months from April 1, 2024, to July 31, 2024. It has a budget of Rs 500 crore and provides subsidies for electric vehicles. State-wise EV subsidies In India of up to Rs 10,000 per two-wheeled electric vehicle, Rs 25,000 per small three-wheeled electric vehicle and Rs 50,000 per large three-wheeled electric vehicle will be provided.

Mitsubishi Heavy Industries will reimburse electric vehicle manufacturers for state-wise EV subsidies In India and demand incentives at the time of vehicle sales. Consumers will also benefit as the amount of subsidy will be deducted from the final billing price, lowering the purchase price of electric vehicles.

Support for electric vehicles under the Electric Mobility Promotion Scheme (EMPS) 2024

Under the scheme, electric vehicles must be manufactured and registered by 31 July 2024 to qualify for subsidy. Support under EMPS-2024 will be provided in the following ways: Manufacturers will need to apply to the Ministry of Heavy Industry for a demand incentive under the programme.

After the application is submitted, the responsible testing agency will certify the vehicle model and forward it to MHI, which will approve the incentive. After MHI approves the incentive, the manufacturer must submit the necessary documents to MHI to receive the incentive.

After submitting the documents, the manufacturer can send the vehicle to the dealer or distributor along with the appropriate statement or invoice. The manufacturer must deduct the incentive amount from the vehicle invoice, which means the purchase price of electric vehicles will be cheaper for consumers.

The manufacturer must submit a refund application along with the invoice and other required documents to Mitsubishi Heavy Industries within 120 days of the sale of the vehicle.

Highlights of the Electric Mobility Promotion Scheme (EMPS) 2024

The pinpoint highlights of the Electric Mobility Promotion Scheme (EMPS) 2024 are as follows:

Scheme Name	Electric Mobility Promotion Scheme (EMPS)
Launch Date	13 March 2024
Launched By	Minister of Heavy Industries
Implementation Period	1 April 2024 – 31 July 2024
Goal	To boost sales performance of two and three-wheeler electric vehicles
Allocation Period	Rs. 500 crore
Beneficiaries	Two-wheeler EVs, three-wheeler EVs, e-rickshaws, e-carts

Importance of Promoting Electromobility

It is important to communicate the importance of electromobility and its benefits to the public. Promoting electric mobility is essential to reduce harmful emissions, mitigate the effects of climate change and reduce air pollution in the environment. Moreover, these electric vehicles are cost-effective and energy efficient.

In the long run, this will help individuals have more on fuel and vehicle maintenance. Disseminating this information through various channels will enable people to make an informed decision while purchasing their next car. From an economic perspective, the EMPS 2024 programme will support India’s Atmanirbharat vision to promote domestic manufacturing and the emerging electric vehicle sector.

This will also generate employment opportunities across the country.

Objectives of the Electric Mobility Promotion Programme

The primary objective of the Electric Mobility Promotion Programme is to support 372,215 electric vehicles. The objective of the programme is to create a competitive and efficient electric vehicle manufacturing industry in India.

To achieve this objective, the government has adopted the Phased Manufacturing Programme (PMP) under the programme to promote domestic manufacturing and strengthen the supply chain for electric vehicles.

The main objective of the programme is to transition towards green mobility and thereby support the electric vehicle industry in the country. This will also encourage the adoption and development of advanced battery technology in electric vehicles.

Eligibility for the Electric Mobility Promotion Scheme

The Government of India provides state-wise EV subsidies In India to the following vehicles: Two and three-wheeler electric vehicles must be registered as per the Central Motor Vehicles Rules, 1989. Two-wheeler electric vehicles (including vehicles used for commercial, private and business purposes).

Three-wheeler electric vehicles including e-carts, e-rickshaws and electric vehicles of the L5 category are registered as commercial vehicles. Electric vehicles must have an advanced battery system.

Manufacturing Schedule

EMPS-2024 will commence on April 1, 2024, and will continue until July 31, 2024.

To qualify for the subsidy, all-electric vehicles must be manufactured and registered by July 31, 2024.

Domestic Value Added (DVA)

Domestic Value Added (DVA) represents the percentage of the value of goods and services intended for export. To promote local manufacturing, companies must set up facilities within three years with a minimum DVA of 25% for that year.

However, this DVA percentage may be increased to 50% in the next five years from the date of issuance of the approval letter by the Ministry of Heavy Industries. The Bank guarantee will be refunded once DVA reaches 50%.

Benefits of Electric Mobility Promotion Scheme (EMPS)

2024 Accelerates adoption of electric vehicles in India.
Facilitates improvements in vehicle battery technology.
Increases sales of electric vehicles and promotes long-term growth of electric mobility.
Helps maintain momentum in electric vehicle sales in recent months.
Promote a competitive, efficient and resilient electric vehicle manufacturing industry in India.
Create significant employment opportunities.

EMPS 2024 and FAME II

There is a difference in the subsidy levels between EMPS 2024 and its predecessor FAME II, with EMPS 2024 providing a subsidy of up to Rs 10,000 while FAME II provides a subsidy of Rs 22,500. However, this subsidy is only available for electric two-wheelers.

Due to low subsidies, the acquisition cost of electric two-wheelers under the EMPS program will be higher initially. However, the initial price of electric scooters has increased by about 10%. In the short term, the price of electric two-wheelers may appear less competitive than gasoline scooters.

This type of subsidy appears to be a challenge for manufacturers. The introduction of low state-wise EV subsidies In India will put further pressure on cost structures. Manufacturers have to decide whether to accept the prescribed cost or pass the cost on to consumers through price hikes. Finding the right balance between the two is key to maintaining affordability.

EMPS are a key pillar in building a well-established EV transport system in India. Continuous technological advancements and infrastructure development have led to acceptance of the adoption of electric two- and three-wheelers. Despite ongoing challenges, the government’s efforts towards building a sustainable transport system are noteworthy.

Moreover, with the development of FAME, India’s transport sector is revolutionising and contributing towards a greener future.

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