Tamil Nadu’s new electric vehicle policy (EV) aims to attract Rs 50,000 crore worth of investments in manufacturing along with development of a robust ecosystem in the state and creation of 0.15 million new jobs in the policy period of next five years.
The state government has brought in the revised EV policy considering the fact that the rapidly changing dynamics of the sector require an agile policy approach and periodic revisions. The previous 2019 EV policy period lapsed in 2022-end.
The Tamil Nadu government has extended the 100% road tax exemption till December 31, 2025 for the categories of EV battery-operated vehicles, namely, two-wheelers, private cars, three-seater auto-rickshaws, transport vehicles (such as taxis, tourist cars), light goods carriers (including three-wheelers), and buses. Waiver on registration charges/ fees will also extended till December 31, 2025 for the same categories of vehicles. Waiver on permit fees will be provided till December 31, 2025 for categories of EV battery-operated vehicles, namely, auto-rickshaws, transport vehicles (such as taxis, tourist cars), light goods carriers (including three-wheelers) and buses.
Among the new features of the policy, the government said that new and expansion projects of EV OEMs will be eligible for 100% reimbursement of the gross SGST payable on the sale of EVs manufactured, sold and registered in the state for a period of 15 years from the date of commercial production upon achieving the minimum eligible investment threshold of Rs 50 crore and minimum employment threshold of 50 jobs.
Likewise, new/ expansion projects in manufacturing of EVs, EV components, electric vehicle supply equipment (EVSE) or EV charging infrastructure in the state will be eligible for 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.
The new policy aims to transform Tamil Nadu into a preferred destination for EV manufacturing in South-East Asia, develop robust infrastructure & industrial ecosystem to attract manufacturing units, and create indigenous EV manufacturing value chains by attracting EV OEM & component manufacturers to establish units in the state.
To accelerate adoption of EVs in Tamil Nadu, the government will provide initial impetus for early adopters of EVs through special demand incentives, develop charging infrastructure with favourable power tariffs through public/ private measures and enhance the development of the EV ecosystem in Tamil Nadu. Until April 30, 2022, more than 0.115 million EVs have been registered in the state, out of which 93% are non-commercial vehicles.
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The state government intends to develop EV cities in Tamil Nadu and promote Chennai, Coimbatore, Tiruchirappalli, Madurai, Salem, and Tirunelveli as pilot cities for implementing e-mobility solutions. It will promote electrification of commercial and public transport fleets.
Tamil Nadu has seen significant and rapid growth in the EV sector as the demand for EVs has increased. Hosur, in particular, has emerged as the leading region for EV manufacturing with several EV OEMs establishing their manufacturing operations in this region. Since the sector is still in a nascent stage, the government seeks to facilitate and support the manufacturing of EVs, components particularly EV cell technologies, batteries, and charging infrastructure in the state with an EV special manufacturing package.
In order to avail incentives under the package, the investment should be greater than Rs 50 crore and create at least 50 direct jobs in the form of new/expansion projects. The Tamil Nadu government seeks to provide manufacturing firms operating in the EV sector with a flexible incentive package through the package instead of a one size fits all model. The multiple options provided under the package will be beneficial for firms operating across the EV manufacturing value chain namely OEMs, component manufacturing, battery manufacturing, and charging infrastructure manufacturing, by allowing them the choice based on their business models and cashflows.
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. Similarly, projects that obtain land by sale or lease will 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.
The state transport undertaking (STUs) operated buses constitute a substantial percentage of the public transport in Tamil Nadu. The government will electrify these fleets through a phased augmentation and replacement plan. The state will endeavour to increase the share of electric buses to 30% of the fleet by 2030.
The STUs will be encouraged to electrify their fleets through loan programmes from multi-lateral agencies. Vehicular fleets of educational institutions such as schools and colleges and private bus fleets in the state will be encouraged to transition to EVs in a gradual manner.
