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The Tamil Nadu government is gearing up to revitalize its electric vehicle (EV) ecosystem by introducing an updated policy in February 2023. Drawing inspiration from leading EV hubs like Maharashtra, Gujarat, and Karnataka, the new policy focuses on various aspects including demand-side incentives, a broader range of supply-side incentives, charging infrastructure incentives, and policy measures to transition diesel light commercial vehicles to electric.

FILE PHOTO: A security guard walks near EU and U.S. flags, before the EU-US summit, in Brussels, Belgium June 15, 2021. REUTERS/Yves Herman

The inclusion of demand-side incentives aims to encourage the retrofitting of two- and three-wheelers from internal combustion engines (ICE) to electric power. This move is in line with the demands of stakeholders and is expected to foster the widespread adoption of electric vehicles in the state. Additionally, the policy will offer incentives for retrofitting commercial vehicles to create a more comprehensive and competitive EV landscape in Tamil Nadu.

The state government will also reevaluate its subsidy programs and explore options to supplement the incentives provided under the FAME 2 scheme. This approach aligns with the strategies adopted by other states like Haryana to accelerate the growth of electric mobility. Furthermore, the government has already announced road tax incentives for EVs as part of its demand-side incentives.

Predictability in policy frameworks is another key requirement for the industry. Manufacturers and stakeholders are seeking mid-term and long-term policies from state governments, providing a roadmap for the next 2-4 years. While some states have been proactive in supporting electric two- and three-wheelers, the industry calls for similar promotion of electric personal cars and support for financing or leasing EVs for business-to-business usage.

In addition to demand and manufacturing benefits, the new EV policy will also prioritize the development of charging infrastructure. Incentives for battery charging and swapping will be considered, primarily for public charging and swapping stations. Private charging stations used by ride-hailing platforms will also be eligible for benefits.

This emphasis on charging infrastructure aligns with industry demands, as public charging stations may face challenges in achieving a favorable return on investment until footfall increases significantly. Consequently, government support becomes crucial to boost EV adoption. Companies like Delta Electronics India are already investing in the development of green charging stations powered by renewable energy sources.

While consumption incentives, EV manufacturing incentives, and charging network support receive significant attention, the industry also seeks assistance for critical EV component manufacturers. Support for these component makers would complement the productivity-linked incentive (PLI) schemes focused on capital-intensive cell manufacturing in the battery sector.

In summary, the updated EV policy in Tamil Nadu aims to invigorate the state’s EV ecosystem by incorporating demand-side incentives, a wider range of supply-side incentives, charging infrastructure support, and measures to transition diesel light commercial vehicles to electric. This comprehensive approach intends to promote the adoption of EVs, attract manufacturing investments, and strengthen the charging infrastructure while aiding critical component manufacturers.


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