Tamil Nadu EV Policy 2019 Aims to Empower the State’s EV Ecosystem

Tamil Nadu State Government released its draft EV Policy 2019 on September 16th, 2019. The policy aims to complement the National Scheme for Faster Adoption and Manufacturing of (Hybrid) Electric Vehicles in India (FAME India) and address state-specific needs. The policy has been welcomed by the Indian EV industry as it announces a slew of benefits to make Tamil Nadu a hub for EV and related manufacturing.

Some Figures Regarding Tamil Nadu Automobile Space

– Tamil Nadu has the second highest vehicle population in the country with 2.77 crore (27.7 million) vehicles. Nearly 85% of these vehicles are two-wheelers.

– 25 lakh (2.5 million) personal cars are registered in the state.

– Around 21,000 Public Transport buses are operated by State Transport Undertakings (STUs). 

– 32,000 buses, minibuses and vans run by educational institutions in the State.

– As of 31.07.2019, Tamil Nadu accounted for 6.4% electric vehicles sold in India.

– Tamil Nadu is a leader in renewable energy with an installed capacity of 12,180 MW.

– The first EV SUV made in India (Kona) was manufactured in Tamil Nadu by Hyundai.

Pre-conditions for Eligibility for Incentives Mentioned under Tamil Nadu EV Policy:

1. Vehicles, companies and charging infrastructure firms need to fulfil the FAME II guidelines issued by the Ministry of Heavy Industry, Government of India.

2. Charging infrastructure and its components should fulfil the guidelines issued by the Ministry of Power, Government of India. 

3. To avail the supply side incentives, the manufactured products must conform to either national or international standards. 

Demand Side incentives (on top of Central Government incentives under FAME 2):

1. 100% road tax exemption on purchases of two-wheelers, e-autos, transport vehicles (Taxis, tourist cars), light goods e-carriers and private cars till 30.12.2022.

2. An open permit system for approved e-autos. No permit required for 3-wheeler goods, e-carriers and electric Light Goods carrier.

3. Auto Rickshaw and taxi permit fees to be waived for EVs till 30.12.2022.

4. The tariff applicable for domestic consumption shall be applicable for Private Charging Station at home and classified under LT Tariff-IA. Private charging in case of Offices, Malls, Gated Community, etc can be done in the common supply with the LT Tariff-V of Tamil Nadu Electricity Board.

5. The Government will develop schemes with a capital subsidy to enable private operators to set up public charging stations (PCS). Tariff for the supply of electricity to the PCS will be determined by Tamil Nadu Electricity Regulatory Commission. It will be endeavoured to fix the tariff as not more than 15% above the average cost of supply. 

6. Supply of Renewable Energy will be ensured on a preferential basis for PCS with zero connection cost.

Supply Side Incentives under Tamil Nadu EV Policy:

Pre-condition for Eligibility – The units engaged in EV, their component or charging infrastructure manufacturing shall make investments above ₹50 crores (₹ 500 million) and create at least 50 direct jobs in the form of new projects or expansion projects. Investments made from April 1, 2018, will be considered eligible for availing incentives.

1. 100% of the SGST paid on the sale of EVs manufactured, sold and registered for use in the State will be reimbursed to the manufacturing companies. The reimbursement will be given for sales by made till 31.12.2030. 

2. Where SGST reimbursement is not applicable (e.g. intermediate products), a capital subsidy of 15% will be given on eligible investments made till 31.12.2025 over 10 years. The capital subsidy will be 20% for EV Battery Manufacturing units.

3. 100% exemption on electricity tax for EV related and charging infrastructure manufacturing industries till 31.12.2025.

4. 100% Stamp Duty exemption for land sale or lease transactions made by EV related and charging infrastructure manufacturing industries till 31.12.2022. 

5. 15% or 50% subsidy on the cost of the land (% depending on the location of land within the state) obtained from government agencies, for allotments made till 31.12.2022. 20% or 50% subsidy in case of EV Battery manufacturing units.

6. Employment Incentive up to Rs. 48,000 per employee in the form of reimbursement of employer’s contribution to the EPF for all new jobs created till 31.12.2025 for EV related and charging infrastructure manufacturing units.

7. Re-skilling allowance to existing automobile manufacturing companies for every current employee in the production line.

8. Additional capital subsidy of 20% over the existing subsidy for MSME units engaged in E-Vehicle component or charging infrastructure manufacturing. Interest subvention increased from 3% to 6% for MSMEs in EV space on loans taken from Tamil Nadu Industrial Investment Corporation. These incentives will be applicable for units that are set up till 31.12.2025. 

9. Creation of EV parks and Vendor Ecosystem, logistics parks and Free Trade warehousing zones

Additional Initiatives to Promote EV Penetration

Over and above the incentives, following steps mentioned in the policy document are noteworthy:

– STUs will strive to replace around 5% of the buses as EV every year and around 1000 EV buses may be introduced every year. STUs will be provided with a subsidy to enable the purchase of EV buses.

– All investment proposals for the EV sector to be provided with the necessary facilitation through ‘Single Window Clearance’ facility.

– Amendment to building and construction laws will be made to ensure that charging infrastructure is integrated at the planning stage for new constructions

– At least 10% of Parking Space to be earmarked for EVs in commercial buildings such as hotels, shopping malls, cinema halls, apartments, etc. and charging stations to be set up in the earmarked space.

To access the complete document released by the TN state government, click below.

To dig deeper into the Indian EV ecosystem and its evolution in the country, read Evolution of EV Ecosystem in India

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