For some time now, electric vehicles (EV) have been hailed as the future of mobility. Eco-friendly and noise-free, these vehicles present a real and sustainable alternative to petrol-run ones.
However, their cost still poses a challenge to widespread adoption, especially in a price-sensitive market like India. Naturally, government-sponsored electric vehicle subsidy programs have become critical to paving the way for EVs in the country.
Thanks to the government’s initiatives to promote e-mobility, electric vehicles are becoming more accessible and affordable to the Indian consumer. Individual state EV policies, aimed at increasing affordability even further, provide more impetus to the shift.
Government subsidy on electric vehicles
The central government offers an e-vehicle subsidy under the national FAME-II scheme, while individual states have formulated their own policies to help EVs become a mainstream alternative.
Each state has its own set of criteria for subsidy in electric vehicles. So, which Indian state offers the most generous benefits for buying an electric vehicle? Let’s take a look.
a) State-wise incentive subsidy in electric vehicle for four-wheelers
Electric vehicles have larger batteries and are eligible for major government incentives like electric vehicle subsidy. State EV programmes also subsidise electric automobiles and Sports Utility Vehicles (SUV). The overall number of vehicles covered under these plans, on the other hand, is substantially lower. The total number of electric automobiles that can be subsidised in most states is set at 10,000 units.
Apart from the national FAME II programme, each state has its own e-mobility strategy and subsidy requirements for electric vehicles. Consequently, state government-sponsored incentives differ from state to state. The table below shows the government subsidy on electric vehicles by state.
b) State-wise incentive subsidy in electric vehicle for two-wheelers
State-specific EV policies are designed for a tenor of 4-5 years from the date of the notice. They only subsidise a specified number of vehicles. Most Indian states have agreed to allocate subsidy for electric vehicles (two-wheelers that qualify for incentives under the FAME-II plan) based on the size of their lithium-ion battery packs.
Electric two-wheelers are eligible for state government subsidy on electric vehicles in the same manner as electric cars and SUVs. Take a look at electric scooter and bike subsidies in the table below.
What is a FAME electric vehicle subsidy?
FAME, or Faster Adoption and Manufacturing of (Hybrid and) Electric Automobiles in India, is an incentive programme for government subsidy on electric vehicles. The EV incentive programme was presented in 2013 as part of the National Mission on Electric Mobility 2011/National Electric Mobility Mission Plan 2020. The following are the main aspects of the subsidy –
- The FAME I scheme’s first phase was approved for a two-year period, beginning April 1, 2015.
- Since then, the EV subsidy programme has been periodically extended. The first phase of FAME was last extended to March 31, 2019.
- The Demand Incentive Disbursement Mechanism (DIDM) is used in the FAME scheme.
- The amount of government subsidy on electric vehicles for each vehicle category (pure electric, hybrid, etc.) has already been established based on technology and battery parameters.
What is the FAME II (FAME 2) subsidy for electric vehicles?
FAME II is the electric vehicle incentive programme’s second phase, which went live on April 1, 2019. Beginning April 2019, the government launched a three-year incentive programme with a budget of Rs. 10,000 crores. The highlights of FAME II are listed below:
- The FAME II e vehicle subsidy is expected to cover 7,000 e-buses, 5 lakh electric 3-wheelers, 55,000 electric vehicles, and 10 lakh electric two-wheelers.
- The EV subsidy programme has been extended till March 2024.
- Increased subsidy for electric vehicles (two-wheelers) is one of the primary attractions of the new FAME II scheme.
- The incentive for two-wheeler EVs was initially set at Rs. 10,000 per kWh. It has now been increased by 50% to Rs. 15,000 per kWh.
- Additionally, the e-vehicle subsidy cap has been raised from 20% to 40% of the vehicle’s cost.
- The subsidy for electric vehicles (four-wheelers) stays unchanged at Rs. 10,000 per kWh.
- For an electric car, the maximum incentive value is Rs. 1.5 lakhs.
FAME II’s Requirements
- The FAME 2 electric vehicle subsidy is available for electric cars and two-wheelers. While purchasing an EV, you should be aware of the specifics of the subsidies programme.
- The incentive is available for electric automobiles and SUVs, with ex-factory price being limited to Rs. 15 lakhs. EV four-wheelers that cost more than Rs. 15 lakhs are, therefore, ineligible for the incentive.
- The system requires a minimum range of 80 kilometers and a top speed of 40 kilometers per hour for battery-powered two-wheelers.
- The FAME II e vehicle subsidy scheme is available for electric two-wheelers that cost less than Rs. 1.5 lakhs.
The following state’s policies do not include a direct subsidy for electric cars and SUVs-
- Andhra Pradesh
- Karnataka
- Madhya Pradesh
- Punjab
- Rajasthan
- Tamil Nadu
- Telangana
- Uttarakhand
- Uttar Pradesh
In most states implementing the subsidy policy, the road tax for electric four-wheelers is completely exempted, with the exception of Kerala, Gujarat, and Uttar Pradesh. In Kerala and Gujarat, buyers are required to pay 50% of the whole road tax amount. In Uttar Pradesh, buyers must pay 70% of the total road tax.
In the meantime, registration fees for all kinds of EVs are waived countrywide. The Ministry of Road Transport and Highways (MoRTH) announced last August that all battery-powered vehicles are exempt from fees for issuing or renewing registration certificates.
Top EV-friendly States that Offer Best Incentives to Buyers
As every Indian state frames its EV policy in alignment with the FAME subsidy scheme, the incentive or electric car subsidy will vary from state to state. Here are a few states that offer the best EV subsidy to buyers-
Two-wheeler: Maximum up to Rs. 20,000
Three-wheeler: Benefits up to Rs. 50,000
Four-wheeler: Maximum up to Rs. 1.5 lakh
Two-wheeler: Maximum up to Rs. 25,000
Three-wheeler: Benefits up to Rs. 30,000
Four-wheeler: Maximum up to Rs. 2.5 lakh
Two-wheeler: Maximum up to Rs. 20,000
Three-wheeler: NA
Four-wheeler: Maximum up to Rs. 60,000
Besides the FAME EV subsidy, Karnataka doesn't extend any direct incentives to EV buyers. But it gives electric car subsidy to EV makers.
Andhra Pradesh also doesn't directly offer electric car subsidy to buyers but it offers them an exemption from registration charges and road tax.
Telangana offers EV buyers complete exemption from registration charges and road tax besides the FAME incentive.
Tamil Nadu offers a 100% road tax waiver and zero registration charges for EV buyers. However, the state government is looking to reconsider its EV policy.
EV buyers in Kerala can get a 50% discount on road tax for the first five years. The state also gives a subsidy to e-rickshaws ranging from 10,000 to 30,000.
Over to you
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14 March 2024
6 mins read
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