This article is written by Gyaaneshwar Joshi, a student of the Faculty of Law, Jamia Millia Islamia, New Delhi. This article discusses the Maharashtra government’s new policy to incentivise electric vehicles under Maharashtra’s Electric Vehicle Policy, 2021.
Table of Contents
Introduction
The Government of India is promoting the faster adoption of Electric Vehicles (EVs) by introducing various schemes and campaigns to provide benefits to the customers. Looking at the total market share of electric vehicles in Press Information Bureau reports released in 2019, India’s total market share in buying EVs is only 0.06% compared to 39% in Norway and 2% in China.
Currently, several state governments are working efficiently to achieve the target set by the central government for making India a 100% electric vehicle nation by 2030. In 2017, the government of Karnataka introduced the Karnataka Electric Vehicle & Energy Storage Policy, 2017 and became the first-ever state to roll out an Electric Vehicle Policy.
In 2018, the Maharashtra government introduced an Electric Vehicle Policy on the same grounds to facilitate the faster adoption of electric vehicles. On 13 July 2021, the state government, by introducing new amendments in its EV policy, cleared the vision to make Maharashtra an Electric Vehicle Hub of India.
FAME I Scheme
In 2013, the Government of India unveiled the National Electric Mobility Mission Plan, 2020 and launched the “Faster Adoption and Manufacturing of Electric Vehicles in India” aka (FAME India) scheme in April 2015 for two years, i.e. till March 2017. The government further extended the tenure of the scheme up to March 2019. The primary purpose of the FAME scheme was to reduce the pollution level and save the government’s revenue on crude oil imports from other countries.
The Government of India set a goal under the FAME-I scheme to switch 100% government vehicles and 30% private vehicles over electric by 2030. Under this scheme, the central government approved Rs. 895 crores to incentivise approximately two lakhs of electric cars. But unfortunately, this scheme ended as a failure and achieved the target of only a thousand electric vehicles to the Indian roads.
FAME II incentives
After taking back the FAME- I scheme, which remained effective until 31 March 2019. In February 2019, the Government of India launched Phase-II of FAME India for three years, which is currently operational and granted a budget of Rs. 10,000 crore towards demand incentives and creation of charging infrastructure in various smart cities of India. The scheme’s objective is to encourage electric and hybrid vehicles adoption by offering upfront incentives and developing efficient charging infrastructure in various smart cities and highways.
Reasons behind the introduction of Maharashtra E-vehicle Policy, 2021
Maharashtra introduced various alluring incentives with the FAME scheme and under the state’s EV policy but hardly witnessed a rise in its total sale capacity of e-vehicles. It has generally four significant reasons:
- High purchasing price of EVs.
- Lack of products and designs as compared to ICE vehicles.
- Lack of charging infrastructure.
- Less awareness about EVs and their benefits.
Looking at the slow uptake of electric vehicles, the Government of Maharashtra decided to revisit and upgrade the previous Electric Vehicle Policy of 2018. Considering the drawbacks in its previous policy, the state government introduced the “Maharashtra Electric Vehicle Policy, 2021” to accelerate EV sales and enhance their production and strengthen the necessary infrastructure in the state.
Under the new policy, the state government sanctioned Rs. 930 crore to shift towards EV mobility, which has validity up to 31 March 2025. The new policy aims to make electric vehicles 10% of all new vehicle registrations in the state and 25% electrification of public transport by 2025. The government plans to electrify all new government vehicles from April 2022 under this policy.
Mission & vision
The Maharashtra Electric Vehicle Policy, 2021 majorly focuses on ‘incentivising’ personal use of two-wheelers & four-wheeler vehicles. Maximum benefits are available for early buyers, which can be availed until 31 December 2021.
The state government planned to subsidise the first 1 lakh EV buyers eligible for an incentive of Rs. 5000 determined by the size of the vehicle and the capacity of its battery. All vehicle models approved under the FAME II scheme are eligible to avail of these incentives in addition to the state incentives provided by the Maharashtra government under the FAME II scheme.
Demand-side incentives
|
Vehicle segment |
Incentive available |
Number of vehicles to be incentivised |
Maximum incentive per vehicle (in Rs.) |
|
e-2W |
INR 5000/kWh |
1,00,000 |
10,000 |
|
e-3W Autos |
INR 5000/kWh |
15,000 |
30,000 |
|
e-3W Good carrier |
INR 5000/kWh |
10,000 |
30,000 |
|
e-4W Cars |
INR 5000/kWh |
10,000 |
1,50,000 |
|
e-4W Good carrier |
INR 5000/kWh |
10,000 |
1,00,000 |
|
e-buses |
10% of vehicle’s Ex-factory cost |
1,000 |
20,00,000 |
The state government set aside an additional early bird incentive price for up to Rs. 15,000 for e-2 wheelers, capped at 40% of the vehicle cost and subsequently Rs. 75,000 for e-3 wheelers that are available on vehicles purchased before 31 December 2021.
Electric cars and SUVs (e-4W) have an incentive amount of Rs. 5,000 depending on the battery capacity. Also, the incentive rates differ with the amount of power used by the car battery. Under the new scheme, the incentive amount for an e-4W car is available on the sales of the first 10,000 motor vehicles with a maximum of 30 kWh battery power (with reference to the above chart).
The state government has planned to boost EVs in public transport and aimed at 25% electrification of public transports by 2025 in six urban centers, i.e. Mumbai, Pune, Nagpur, Aurangabad, Amravati, and Nashik. Aggregators such as e-commerce companies, delivery or logistic players are also encouraged to use electric vehicles for their product delivery. This policy exempts all e-vehicles from road tax and registration fees and aims to electrify 25% of the urban fleet by 2025.
Need to encourage electric vehicles
Scooter’s India Private Limited launched India’s first electric vehicle as a three-wheeler, Vikram SAFA in 1996. But the trend of electric vehicles could not last for long because of the high cost of EVs and the lack of supporting infrastructure in front of their fossil fuel counterparts.
The faster adoption of electric vehicles can be helpful to achieve India’s target in UN sustainable development, which has one such goal of making the world’s environment pollution-free by 2030. Undoubtedly, electric vehicles are environment-friendly means of transport than petrol-diesel-run vehicles, which are major pollutants in urban areas.
Electric vehicles can be beneficial for those metropolitan cities which are often engulfed with smog. Therefore, every state government must bring up these new-generation EV policies to gradually increase the market share of e-vehicles and spread awareness in the population about the benefit of its usage.
Provisions of the policy and their importance
The government of Maharashtra has planned to give an extensive boost in infrastructure and manufacturing facilities of electric vehicles in the state. The most commonly expressed concern for EV buyers today is the lack of availability of charging infrastructure within the cities and highways. The new policy proposes to set up around 2500 charging stations in seven major urban cities and four highways, i.e. Mumbai-Pune, Mumbai-Nashik, Mumbai-Nagpur, Pune-Nashik. The state government decided to set up 1500 charging stations in the greater Mumbai region, Pune- 500, Nagpur and Nashik- 150, Aurangabad- 75, Amravati- 30, Solapur- 20.
Incentives are available on setting up the first 15,000 slow charges and 500 fast chargers on private land. Urban local bodies are also encouraged to provide property tax rebates to residential owners for installing private charging infrastructure. For the upcoming projects, the state government has made EV-ready parking spaces mandatory in 20% residential apartments, 25% in institutional and commercial complexes, and 100% in government offices.
Impact of the policy on the economy
Maharashtra aims to be India’s top electric vehicle producer in terms of annual production capacity. The state government incentivised EV production facilities, advanced chemistry cell battery factories, and EV manufacturing plants and targets to establish at least one ‘Giga Factory’ for manufacturing hydrogen fuel cells.
The provisions under the new policy will open a gateway of opportunities to Maharashtra’s youth and ease the state government’s efforts to invite more EV companies to set up their factories in Maharashtra. The Maharashtra government has decided to waive off stamp duty and exempt electricity duty payments, which will help EV companies to run a successful yet profitable business in Maharashtra as compared to other states.
Why are EVs expensive?
The main reason behind the EVs’ high price is their components, especially the batteries. EV battery comprises lithium-ion cells and uses expensive metals such as lithium, cobalt, nickel, and manganese. Mass production of these batteries is a challenge, and supply chains are minimal. The existence of natural resources like lithium, cobalt is also limited. Moreover, the technology used in EVs is relatively newer, and demand and awareness about the vehicle are quite lower.
Therefore, several state governments are introducing new EV policies to cater to the needs of EV buyers and introducing various alluring incentives to boost the production and sale of electric vehicles.
Maharashtra’s neighbour Gujarat has unveiled an Electric Vehicle Policy in 2021 and became the only Indian state to offer the lowest price EVs. Maharashtra by promising attractive incentives has exempted all EVs sold in the state till 2025 from paying road taxes. The government of Maharashtra has planned to increase the manufacturing capacity and create an all-around infrastructure for the efficient use of electric vehicles.
Other countries with Electric vehicle specific policies
The variety of supporting policies given by several countries is helping to expand the sales of electric cars, with recent electric cars shares approximately 4.6% in worldwide car sales. Significant fiscal incentives provided by several countries geared up the sale of electric vehicles and put forward a need to establish more EV manufacturing and battery industries to increase the competition in the E-vehicles market. Several countries are providing attractive incentives to reduce the price gap of EVs with other conventional vehicles. Norway became the first country to adopt EV policies in the 1990s and subsequently adopted by some nations like the United States in 2008 and China in 2014.
European Union
Several European countries are currently providing EV subsidies and incentive measures. European Union has approved the ‘EU Green Deal’ to reach climate neutrality by 2050. In December 2020, the EU published the next generation’s “Sustainable and Smart Mobility Strategy” with an action plan to fulfil the target of Zero Emission Vehicle (ZEV) transportation. Subsequently, in early 2021, nine European states have urged European Commission to phase out petrol and diesel cars to facilitate the timely transition towards zero-emission mobility.
United States
The United States rolled out SAFE (Safer, Affordable, Fuel Efficient) for model years 2021-26. Currently, several states at the federal level have encouraged more robust EV policies. They are following California Low Emissions Vehicle pollutant and GHG Emissions regulations, representing about a third of US car sales. On 23 September 2020, the governor of California issued an Executive order to set up an action plan to achieve the 100% target of selling zero-emission new cars and passenger light trucks by 2035. Other state-level policies such as Low Carbon Fuel Standard support EV adoption, especially in the heavy-duty vehicle sector.
Japan
Japan is consistently working on the target to achieve carbon-neutral status by 2050. In December 2020, the Ministry of Economy, Trade, and Industry (METI) prepared the “Green Growth Strategy” to fulfil that purpose.
Japan is currently looking forward to working on an action plan to electrify all new passenger cars by the mid-2030s. In 2020, the sale of EVs dropped more than overall car sales, after which Japan took measures and doubled subsidies for all passenger ZEVs. In 2020, the government exempted tax liabilities on BEVs, PHEVs, and FCEVs for two years. Therefore, in January 2021, electric cars sales increased around 35% as compared to January last year.
Canada
Canada supports key infrastructure and ZEV incentives to reach its target of becoming a zero-emission country by 2050. The government sets a 100% ZEV sales target to be achieved by 2040.
In 2020, the federal investments announced USD 1.2 billion to spend on the low carbon and zero-emission fuels fund to increase mass production and usage of low-carbon fuels. The government allocated additional funds to build up major infrastructure and ZEV deployment programs.
Chile
Chile’s government’s “National Electromobility Strategy” aims to have 40% electric cars in private stock by 2050 and 100% public transport by 2050. Chile’s Energy Roadmap 2018-22 targets to bring a ten-fold increase in the sales of electric vehicles in 2022 compared with 2017 when the scheme started.
The country’s new energy efficiency policy aims to reduce energy intensity by at least 10% by 2030. The government is currently running alluring subsidies for electric taxis and on the installation of home charging points.
Conclusion
The Central government has set up only selling electric vehicles by 2030 in its National Electric Mobility Mission Plan. However, the experts have predicted that the transition to e-vehicles may take longer than 2030.
Undoubtedly, EVs are environment-friendly means of transportation, but there are chances that battery manufacturing companies of electric vehicles can increase carbon dioxide (CO2) emissions in the atmosphere. The extraction of rare earth elements like lithium, nickel, and cobalt required to produce batteries is another challenge that needs to be done carefully with utmost precautions.
References
- https://pib.gov.in/Pressreleaseshare.aspx?PRID=1577007
- https://indiacsr.in/overview-indias-2030-vision-electric-vehicle/
- https://economictimes.indiatimes.com/industry/renewables/maharashtra-ev-policy-to-accelerate-electric-vehicle-adoption/articleshow/84400771.cms
- https://www.thehindu.com/news/cities/mumbai/maharashtra-unveils-new-ev-policy/article35311647.ece
- https://www.livemint.com/news/india/maharashtra-govt-issues-ev-policy-aims-to-make-10-of-new-vehicle-registrations-under-electric-11626178528769.html
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