TheNFAPost Podcast

Chennai, NFAPost: The just-released electric vehicle policy by the Tamil Nadu government signals the State’s intend to make it big in the marketplace. Already a major player in the automobile and auto-component sector, the government plans to attract Rs 50,000 crore (Rs 500 billion) of investment in EV manufacturing apart from creating a comprehensive and EV ecosystem in the State.

Such investment is expected to create 1.5 lakh new jobs. The broad objectives of this policy are to create robust infrastructure for electric vehicles including adequate power supply and network of charging points with favourable power tariff, promote innovaon in EV for automotive and shared mobility by providing the ecosystem and infrastructure to make Tamil Nadu, the EV Hub of India and to create a pool of skilled workforce for the EV industry through the technical instutions available in the state and create new jobs in the EV industry, according to Tamil Nadu Electric Vehicle Policy 2019.

Startup encouragement

The Tamil Nadu government will encourage start-ups in the e-vehicle sector and will offer incubation services to them in the form of office space, common facilities and mentoring support. An EV venture capital fund will be created by the government to offer financial support to EV start-ups to enable them to scale up their business.

The policy envisages making Tamil Nadu the preferred destination for electric vehicles and component manufacturing units including battery and charging infrastructure. It aims to create a conducive environment for industry and research institutions to focus on cutting edge research in EV technologies and reap benefits from the outcome. Focus will be on recycling and reuse of batteries and disposal of the rejected batteries in an environment-friendly manner to avoid pollution.

Tax exemption

The government has announced 100% motor vehicle tax exemption for all electric vehicles including two- wheelers, cars, auto rickshaws, buses and light goods carriers till December 2022. The policy also announced a slew of special incentives to those who make electric vehicles, electric parts and batteries.

In addition to these, those companies which invest a minimum of Rs 50 crore and provide direct employment to a minimum of 50 people will get 100% refund of SGST till 2030 provided they manufacture and sell electric vehicles in the State. The policy also provides a capital subsidy of up to 15% to electric vehicles.

EV battery manufacturing

The government will focus on policy interventions intended to encourage EV manufacturing. To promote investments in electric vehicle manufacturing, EV battery manufacturing or assembly and EV charging infrastructure manufacturing, and equipment manufacturing enterprises, incentives and concessions will be offered by the government. Further, it is envisaged that network and diffusion effects will spur early market creation through demand side incentives and creation of charging infrastructure that will promote the culture of EV usage in the State.

Nearly 25 lakh personal cars have been registered in the State, so far. Close to 85% of vehicle population is two-wheeler and there is a great potential for cars and two-wheelers in the EV segment. The two-wheeler segment has relatively lower battery capacity requirements that enable fast charging solutions through standard charging infrastructure. The conversion to EV will be encouraged through fiscal concessions and creation of charging network.

Industrial parks

Those who wish to make investments on vehicle, battery, parts manufacturing inside the State government industrial parks, will get a 20% subsidy on land price, and those who choose State’s southern parts/region (industrially backward areas now) for the same will get a subsidy of up to 50% on land price. This incentives are valid till 2022.

In addition to that, a 100% exemption on land registration fee will be offered to those investors who evince interest in setting up of EV projects in the State. This offer is also valid up to 2022. To woo investments further, a 100% electricity tax exemption will be also provided to those manufacturers of EVs, parts and other allied equipment makers.

The state government will provide necessary funds to procure and deploy electric vehicles across its departments. An open permit system for three-wheeler electric vehicles will be implemented, the policy note further said.

Capital subsidy

According to the policy, for every job created in this sector, the state government will offer subsidy equal to that of everyone’s PF contribution. For those SMEs, tiny industries that enter this space will get an additional 20% capital subsidy on their investments.

The state government also said that it will offer incubation services in the form of office space, common facilities and mentoring support to encourage start-ups in the EV sector. The policy said building and construction laws will be amended to ensure the integration of charging infrastructure in the planning stage for all constructions and apartment in the cities.

The state government’s power utility company TANGEDCO will set up charging infrastructure on its own or through public private partnership models.

Automobile manufacturing

Transition support for existing automobile manufacturers to adapt to the EV manufacturing system including a one-time reskilling allowance for the existing production line employees will also be provided.

The state government will make necessary amendments to ensure that the requisite support services will be provided to promote the electric vehicles making in a big way.

Tamil Nadu will promote conversion of all auto rickshaws in six major cities such as Chennai, Coimbatore, Trichy, Madurai, Salem and Tirunelveli to EVs within a span of ten years. This will be extended to other cities and towns in a gradual manner. Similarly, the State will support conversion of all taxis and app-based transport operators and aggregators in the six major cities to Evs in a span of ten years.

Around 21,000 public transport buses are operated by State Transport Undertakings (STUs) in the State. STUs will strive to replace around 5% of the buses as EV every year and around 1,000 EV buses may be introduced every year. The buses are expected to be charged at the bus depots using 3-Phase electric connection. In addition, small top up charging can be done en-route station or bus terminals. One slow-charging unit for every electric bus and one fast-charging station for every 10 electric buses shall be provided.

Push from ecommerce cos

Private operators of buses will also be encouraged for transiton to EV buses. The private bus owners shall convert ICE buses into electric buses at their choice. Conversion of the buses operated to pilgrimage centres, tourist places, national parks, into EVs will be encouraged.

Small commercial vehicles used for delivering light loads such as mini goods vehicles in cities will be encouraged to convert to EVs. E-commerce and delivery companies in Tamil Nadu will be encouraged for transition of their vehicles to mini goods EVs gradually.


Please enter your comment!
Please enter your name here