Electric vehicle subsidy in India 2023

Electric vehicle subsidy programs provided by the government have been critical in paving the way for EVs in the country. Electric vehicles are becoming increasingly accessible and affordable to consumers in India. The EV policy is being implemented in many states. The major goal of which is to boost capacity and bring additional momentum to the transformation.

You may believe that buying an electric vehicle is more expensive than purchasing an internal combustion engine vehicle, however, this is mainly due to the greater initial cost. Electric vehicles continue to have a lower effective lifetime cost. The government provides various financial incentives to make electric vehicles less expensive to you.

The following are the primary mechanisms for obtaining incentives:

1. Incentives for Purchase: The consumer receives a direct discount on the cost of the electric vehicle.
2. Coupons: Financial incentive in which the money is repaid later
3. Discount on interest: When you get a loan to buy an electric vehicle, you get a discount on the interest rate.
4. Exemption from paying road taxes: Road tax is waived at the time of purchase.
5. Exemption from registration fees: The one-time registration price associated with the purchase of a new vehicle is waived.
6. Income tax benefit: A reduction in the amount of tax that an individual must pay to the government.
7. Incentives for scrapping: Provided upon the de-registration of outdated fuel and diesel vehicles
8. Others: Interest-free loans, top-up subsidies, special incentives on electric three-wheelers, and other benefits are also available.

For some years, the use of electric vehicles in India has been relatively high. They are also thought to be highly advantageous in the future. Electric automobiles are more environmentally friendly and quiet than diesel and gasoline-powered vehicles. However, due to their high price, purchasing them has become difficult, particularly in a price-sensitive market like India.

Electric vehicle subsidy programs provided by the government have been critical in paving the way for EVs in the country. Electric vehicles are becoming increasingly accessible and affordable to consumers in India. The EV policy is being implemented in many states. The major goal of which is to boost capacity and bring additional momentum to the transformation.

Electric vehicle subsidies from the government

Under the national FAME-II program, the central government offers subsidies for electric vehicles, while individual state governments have developed their own strategies to help electric vehicles become the primary alternative. Each state has established its own standards for electric vehicle subsidies.

Fame I electric vehicle subsidy

FAME, or Faster Adoption and Manufacturing of (Hybrid and) Electric Automobiles in India, is a government incentive program for electric vehicle subsidies in India. As part of the National Mission on Electric Mobility 2011/National Electric Mobility Mission Plan 2020, the EV incentive scheme was launched in 2013.

The following are the primary characteristics of its subsidy:

• The first phase of the Fame I plan was approved for a two-year term beginning April 1, 2015.
• The electric vehicle subsidy program has been extended on several occasions, with the first phase of FAME most recently extended through March 31, 2019.
• In the fame plan, DIDM (Demand Incentive Disbursement Mechanism) is implemented.
• The amount of government subsidy for electric vehicles for each vehicle category (pure electric, hybrid, etc.) has previously been established based on technology and battery specifications.

Fame II electric vehicle subsidy

The second phase of the electric vehicle incentive program, FAME II, began on April 1, 2019. The government established a three-year stimulus package with a budget of Rs 10,000 crore in April 2019.

The following are the primary characteristics of its subsidy:

• FAME II electric vehicle subsidies are planned to cover 7,000 e-buses, 5 lakhs electric three-wheelers, 55,000 electric automobiles, and 10 lakh electric two-wheelers.
• The electric vehicle subsidy scheme has been extended until March 2024.
• One of the main attractions of the new FAME II scheme is the enhanced subsidy for electric vehicles (2-wheelers).
• The original incentive for a two-wheeled electric vehicle was set at Rs 10,000 per kilowatt hour. It has now been raised by half to Rs 15,000 per kWh.
• Furthermore, the e-vehicle subsidy cap has been raised from 20% to 40% of the vehicle's cost.

State Wise Best electric vehicle subsidies

The Indian government tailors its EV strategy to the fame subsidy system, incentives, or electric vehicle subsidies vary by state. Here are some states with the best EV subsidies for buyers:

Gujarat

Benefits for three-wheeler vehicles: Up to Rs 50,000

Maharashtra

• Two-wheeler: Up to Rs 25,000
• Three-wheeler vehicles: Up to Rs 30,000
• Four-wheeler vehicle: Up to Rs 2.5 lakh

Delhi

The Delhi government offers an EV vehicle subsidy of 10,000 kWh on four-wheelers, with a maximum subsidy of Rs 1,50000 for the first 1,000 customers. There is a benefit of INR 5,000 per kWh with a maximum subsidy of INR 30,000 and a scrapping incentive of INR 10,000 for two-wheelers. In addition, costs such as road tax and registration fees for electric vehicles in Delhi have been fully waived.

Punjab

The first 1 lakh electric vehicle owners in Punjab would receive a financial incentive of up to Rs 10,000. The first 10,000 customers of electric auto-rickshaws and e-rickshaws would receive incentives ranging from Rs 30,000 to Rs 50,000, the first 5,000 buyers of e-carts will receive incentives ranging from Rs 30,000 to Rs 50,000, and the first 5,000 buyers of light commercial vehicles will receive incentives ranging from Rs 30,000 to Rs 50,000.

Rajasthan

Subsidies will range from 5 to 10 thousand rupees for electric two-wheelers and 10 to 20 thousand rupees for three-wheelers in Rajasthan. Four-wheelers receive up to Rs 50,000 in subsidies, while buses receive up to Rs 2 lakh.

Haryana

Haryana's government offers a 30% subsidy on the on-road pricing of electric two-wheelers, a 30% discount on the on-road price of small vehicles such as e-rickshaws and tempos in three-wheelers, and a 30% subsidy on the purchase of four-wheelers.

Madhya Pradesh

Madhya Pradesh's new Electric Vehicle Policy provides a 15% discount on the factory price of electric vehicles purchased. Subsidies of up to Rs 5,000 will be provided for the first 2 lakh electric two-wheeler vehicles, Rs 12,000 for the first 50,000 electric three-wheelers, and up to Rs 1 lakh for the first 25,000 electric four-wheelers.

Karnataka

Aside from the well-known energy subsidies, Karnataka does not provide any direct incentives to EV buyers. However, it provides EV makers with a subsidy for electric vehicles.

Andhra Pradesh

Andhra Pradesh does not provide direct subsidies to electric vehicle owners, although it does exempt them from registration and road tax.

Telangana

In addition to FAME incentives, Telangana gives electric vehicle customers a total exemption from registration and road tax.

Kerala

In Kerala, electric vehicle owners receive a 50% discount on road tax for the first five years, while e-rickshaw buyers receive a subsidy ranging from Rs 10,000 to Rs 30,000.

In addition to financial incentives that reduce the initial cost and overall cost of ownership of EVs, the majority of states are passing significant regulatory reforms and tax exemptions for EVs, such as an open permit system for e-autorickshaws, waivers of road tax and registration fees, and provisions for EV reserved parking, all of which would go a long way toward making EVs competitive with their ICE counterparts.