Tamil Nadu Electric Vehicles Policy 2023

Tamil Nadu’s new ‘Electric Vehicles Policy 2023’ was launched by the Hon’ble Chief Minister of Tamil Nadu, Thiru. M. K. Stalin, in the presence of industry leaders and key officials. This Policy covers manufacturing units engaged in the manufacturing of Electric Vehicles, EV Components, Electric Vehicle Supply Equipment (EVSE) and EV Charging Infrastructure, charging stations/charging point operators, and customers purchasing EVs in Tamil Nadu. The EVs incentivised in this policy will need to comply with FAME II guidelines issued by the Ministry of Heavy Industry, Government of India. Similarly, charging stations would need to comply with the Charging Infrastructure for Electric Vehicles – Guidelines and Standards issued by the Ministry of Power, Government of India.

This Policy shall be valid for a period of 5 years from the date of the policy notification, or till a new Policy is announced.

Objectives of the Policy

The Government of Tamil Nadu has a vision of attracting Rs. 50,000 crore worth of investments in EV manufacturing, creation of 1.5 lakh new jobs during the Policy period, and development of a robust EV ecosystem in the State.

The policy objectives are as follows:

a) Transform Tamil Nadu into the preferred destination for EV manufacturing in South-East Asia

• Develop robust infrastructure & industrial ecosystem to attract manufacturing units.
• Create indigenous EV manufacturing value chains by attracting EV OEM & Component manufacturers to establish units in the State.

b) Accelerate adoption of EVs in Tamil Nadu

• Provide initial impetus for early adopters of Electric Vehicles through special demand incentives.
• Develop charging infrastructure with favourable power tariffs through public/ private measures.

c) Enhance the development of the EV ecosystem in Tamil Nadu

• Develop industry-academia linkages to create a skilled workforce pool for EVs.
• Promote R&D and innovations in automotive and shared mobility.
• Promote the recycling industry to develop a circular economy in the State.

d) Develop EV Cities in Tamil Nadu

• Promote Chennai, Coimbatore, Tiruchirappalli, Madurai, Salem, and Tirunelveli as pilot cities for implementing e-mobility solutions.
• Promote electrification of commercial and public transport fleets.

Incentives for Suppliers/ Manufacturers Side-

In order to avail incentives under the EV Special Manufacturing Package, the investment in EFA (Eligible Fixed Assets) should be greater than Rs. 50 crore and create at least 50 direct jobs in the form of new/expansion projects. For projects with investment in EFA below Rs. 50 crore, the Tamil Nadu MSME Policy 2021 would be applicable.

Projects for which a package of incentives has already been sanctioned under the Tamil Nadu EV Policy 2019 (TNEV Policy 2019) and the commercial production has commenced prior to the notification of this Policy, shall be eligible for benefits under the TNEV Policy 2019.

1. EV Special Manufacturing Package

• Inclusion of R&D in EFA – To encourage R&D in EV manufacturing, EFA shall include the following intangible R&D-related expenditure, subject to a ceiling of up to 20% of EFA : Expenditure incurred on new R&D ; Expenditure related to Transfer of Technology (ToT) Agreements

• Investment Promotion Subsidy – New/expansion projects in manufacturing of Electric Vehicles, EV Components, Electric Vehicle Supply Equipment (EVSE) or EV Charging Infrastructure in the State can avail incentives under one of the four options provided below based on their eligibility. These options are mutually exclusive, and a one-time choice has to be exercised at the beginning of the Project by the investor.

a) 100% reimbursement of the Gross SGST payable on the sale of EVs manufactured, sold, and registered in the State; or

b) A subsidy of up to 2% of the project’s annual turnover, subject to an annual cap of 4% of the cumulative investment in EFA for a period of 10 years from the date of commercial production; or

c) A Capital Subsidy of 15% of investment in Eligible Fixed Assets to be disbursed in ten equal annual installments; or

d) A special capital subsidy of 20% of investment in Eligible Fixed Assets to be disbursed in 15 (fifteen) equal annual instalments for new/expansion projects in advanced chemistry cells (ACC) manufacturing.

• Electricity Tax Exemption – Projects will be provided 100% exemption on electricity tax for a period of 5 years on power purchased from the Tamil Nadu Generation & Distribution Corporation Limited (TANGEDCO) or generated and consumed from captive sources.

• Stamp Duty – Projects that obtain land by sale or lease shall be entitled to 100% exemption on stamp duty for purchase/lease of land obtained from government agencies such as TIDCO/SIPCOT/ ELCOT till the policy period. In case of private land, 100% stamp duty concession shall be provided as a back ended subsidy for up to 50 acres after the commencement of commercial production or fulfilment of investment and employment commitment, whichever is earlier.

• Subsidy on Cost of Land – For eligible projects government industrial estates (SIPCOT/TIDCO/ELCOT etc.), land allotment will be made at 10% concessional rate in “A” & “B” districts and at a 50% concessional rate in “C” districts for land up to 20% of EFA. For private land in “C” districts, 50% subsidy will be offered on the cost of land as per guideline value up to an extent of 50 acres and subject to land cost not exceeding 20% of EFA and a cap of Rs. 2 cr. provided that at least 70% of the land is used for manufacturing operations.

• Employment Incentive – Projects will be provided an employment incentive in the form of the reimbursement of the employer’s contribution to the EPF for all new jobs created during the policy period. This incentive shall be paid for a period of one year and shall not exceed Rs.48,000 per employee for residents of Tamil Nadu.

• Green Industry Incentive – The Government of Tamil Nadu is focused on encouraging the growth of sustainable manufacturing practices. Therefore, projects under the scope of this Policy shall be eligible to avail of the Green Industry Incentive of up to Rs. 1 crore as per the Tamil Nadu Industrial Policy 2021 (Para 13.5.3 of TNIP 2021).

• Quality Certification Incentive – Under the Quality Certification Incentive, 50% of the total cost incurred by the project for obtaining certifications from ARAI, ICAT, or any other national or international agencies as certified by a Chartered Accountant, limited to Rs. 1 crore for the period of investment, during the policy period.

• Intellectual Property Creation Incentive – Under this incentive component, projects shall be eligible for 50% reimbursement on the cost incurred for patents, copyrights, and trademarks, subject to a maximum of Rs. 1 crore for the period of the investment, during the policy period.

2. Special Investment for MSME Sector

An additional capital subsidy of 20% will be offered over and above the eligibility limit for capital subsidy under the existing capital subsidy scheme to MSME units that are engaged in E-vehicle component or charging inf rastructure manufacturer. 

Incentives for Buyers Side –

The Government of Tamil Nadu has provided exemptions and waivers of the road tax and registration fees to battery-operated vehicles till 31.12.2022 . The Government of Tamil Nadu through this Policy & vide G.O. (Ms.) No. 17 dated 13.01.2023 issued by the Home (Transport-I) Department, shall extend these benefits as detailed below:

• 100% road tax exemption and waiver on Registration charges/fees will be provided till 31.12.2025 for the following categories of EV battery-operated vehicles, namely, two-wheelers, private cars, three-seater auto-rickshaws, transport vehicles (such as taxis, tourist cars etc.), light goods carriers (including three-wheelers), and buses.
• Waiver on Permit Fees will be provided till 31.12.2025 for the following categories of EV battery-operated vehicles, namely, auto-rickshaws, transport vehicles (such as taxis, tourist cars, etc.), light goods carriers (including three-wheelers) and buses.

Incentives for Charging Infrastructure –

• To support the growth of Public Charging Stations, the Government shall undertake a revision of the demand and energy tariffs, with due approval from Tamil Nadu Electricity Regulatory Commission. Reduction of existing demand charges by 75% for the first 2 years and thereafter by 50% for the subsequent 2 years and Reduction of energy charges by 50% between 8 AM and 4 PM to incentivise charging during non-peak hours to promote usage of renewable energy for EV charging has been proposed.

• Firms, which establish public charging stations in Tamil Nadu complying with the guidelines and standards issued by the Ministry of Power, Government of India will be eligible for a 25% subsidy of the cost involved in the purchase of equipment & machinery during the policy period.

• The first 50 private charging stations set up in Tamil Nadu shall be eligible for a capital subsidy of 25% upto Rs. 10,00,000 on the cost involved in the purchase of equipment and machinery during the policy period.

Incentives for Public Battery Swapping Stations –

The first 200 public battery swapping stations set up in Tamil Nadu shall be eligible for a capital subsidy of 25% on the cost involved in the purchase of equipment and machinery limited to Rs. 2 lakh per station.

Retrofitting & Remanufacture –

The Government shall also incentivise commercial vehicles, which shall retrofit their existing ICE vehicles and convert them into EVs. Retrofitted vehicles that comply with Automotive Research Association of India (ARAI) standards shall be eligible for the following incentives up to 31.12.2025:

Link to Policy Document