Policy Overdrive

Gujarat offers a range of incentives to spur EV adoption

Gujarat has, in many ways, become one of the prime movers in India’s pursuit of its climate goals. In addition to being the state with the third-highest installed renewable energy capacity in the country, it also powers about 30 per cent of its energy needs through clean energy. It is, moreover, showing very few signs of losing momentum as it continues to set out ambitious goals in carbon-free technology. Seven months after Gujarat launched its New Solar Policy, 2021, the state has now announced the Gujarat Electric Vehicle (EV) Policy, 2021 to facilitate the transition of its transportation sector to electric mobility.  The policy will be valid for a four-year period starting July 1, 2021. Renewable Watch takes a deeper look at the new policy and its potential implications…

Objectives and targets

The Gujarat EV Policy, 2021 has been formed with four broad objectives. In addition to transitioning the state’s transportation sector to electric mobility, the policy aims to build a manufacturing hub for EVs and ancillary equipment. Additionally, it aims to encourage start-ups in the EV space and foster the development of support sectors such as data analytics and information technology. Lastly, the policy is targeted at improving the quality of the environment by reducing air pollution.

The policy, during its period of operation, will offer support to consumers who purchase the first 200,000 EVs for either individual or commercial use. These include 110,000 two-wheelers, 70,000 three-wheelers, and 20,000 four-wheelers. Along with this, it aims to promote the setting up of 250 EV charging stations in the state, in addition to the 278 that have already been approved under the central government’s Faster Adoption and Manufacturing of (Strong) Hybrid and Electric Vehicles (FAME) II programme. The Gujarat EV Policy, 2021, with an outlay of Rs 8.7 billion, will offer exemptions, subsidies and incentives to consumers as well as manufacturers in the EV space. To increase the uptake of EVs at the consumer level, the policy offers demand incentives based on a vehicle’s battery capacity (in kWh). All EVs registered in Gujarat during the policy period will also be exempt from the registration fee.

That said, the policy specifies the threshold price for which subsidies can be availed of, based on the type of vehicle. The maximum price for availing subsidy is Rs 150,000 for two-wheelers, Rs 500,000 for three-wheelers, and Rs 150,000 for four-wheelers. The second series of incentives offered by the policy is aimed at promoting the development of charging infrastructure in the state. It equally encourages a variety of business models to build charging infrastructure of different capacities and technologies. Further, it calls for a range of players to install stations, including those privately owned, discom owned, or investor owned.

A notable feature of these incentives is that they offer a capital subsidy of up to 25 per cent on equipment/machinery (limited up to Rs 1 million) for the first 250 commercial public EV charging stations. Petrol pumps will be allowed to set up charging stations subject to passing tests for fire and safety standards. Even households and commercial establishments can install charging stations at designated parking spaces after providing a no-objection certificate. In addition to these incentives, the state government will offer a 100 per cent exemption on electricity duty for EV charging stations during the policy period. It also proposes that state electricity distribution licensees should link the charging of EVs from the existing connection of a consumer at the existing tariff, except in the case of an agricultural connection.

For EV manufacturing, the policy document states that all parties that wish to set up or upgrade their facilities will receive benefits as per the Gujarat Industrial Policy, 2020. Under the policy, EV and EV component manufacturing are listed as sunrise sectors and will be given incremental incentives over the five-year policy period.

Outlook

With the launch of its latest policy for EVs and their supporting infrastructure, Gujarat proves yet again that it is one of the state leaders in India’s clean energy transition. The demand incentives mean that Gujarat’s EVs are now among the cheapest. To this end, a multifold increase in the uptake of these vehicles is expected. One concern, however, is that there are very few four-wheelers in the Indian market that are eligible for receiving subsidies. This might need to be revised if the specific policy targets are to be met. Summing up, with its track record in developing renewable energy and progressive discoms with good financial health, it is expected that Gujarat will lead the way in the EV sector as well.

 

By Rithvik Kumar

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