The Indian state of Gujarat has launched a progressive and future-looking electric vehicles (EV) policy today. One out of every three passenger cars manufactured in India come from Gujarat. The state’s announcement today will provide a fillip to the electric mobility ecosystem in the country.
The EV policy approval is timely as the state is looking at implementing green recovery measures in the aftermath of a particularly debilitating wave of COVID-19. Embracing the next generation zero emission vehicles is extremely critical to managing the high air pollution levels across the Indian cities, improving public health, and fighting the climate crisis. The state had earlier this month released an action plan on climate change with dire warnings about extreme climate impacts unless strong action is taken now.
The EV policy aims to support electrification of 200,000 vehicles over the next four years (110,000 two-wheelers, 70,000 three-wheelers and 20,000 four-wheelers). A bigger opportunity here is the integration and use of renewable energy to power these clean vehicles. The ability to leverage its growing renewable energy capacity (which is likely to touch the 12,000 MW mark) distinguishes Gujarat from all other Indian states.
Salient features of the EV policy:
Several states in India have developed EV policies focusing on different aspects of the value chain. For instance, states like Karnataka, Tamil Nadu, and Andhra Pradesh emphasize developing EV manufacturing while Delhi stresses demand generation. Gujarat, however, has taken a balanced approach by announcing a big incentive for EVs buyers (₹10,000 per kWh) and also offering lucrative supply side incentives to attract investments in manufacturing, thereby taking care of both demand and supply sides.
- Demand incentives: An incentive of ₹10,000 per kWh is provided across vehicle categories, as follows:
|Vehicle categories||Maximum demand incentives|
The combined fiscal incentive offered by the national government’s FAME II scheme and Gujarat EV Policy is expected to provide an overall benefit of over ₹60,000 which can definitely make electric two-wheelers price competitive with conventional vehicles, thereby providing a much needed boost for mass adoption. For four-wheelers, unlike FAME II, demand incentives are applicable to both commercial and personal vehicles.
- Charging infrastructure: 25% capital subsidy on charging equipment/machinery (up to ₹1 million per station) is included for the first 250 public charging stations.
- Technology agnostic: Various charging technologies, including battery swapping and wireless charging, are acknowledged at par with park and charge solutions.
NRDC, along with partner Gujarat Energy Research and Management Institute (GERMI), has been working with a wide range of industry stakeholders on developing an enabling policy framework, which could immaculately facilitate setting up manufacturing facilities and drive EV adoption in Gujarat. Earlier this month, a diverse group of business, civil society, and academic leaders also came together to submit a coalition letter to encourage the government of Gujarat to release, adopt and implement its draft electric mobility policy. The letter emphasized that electric mobility is critical to rebuilding a stronger post-COVID-19 economy in India. NRDC and stakeholders commend the state on coming up with such a forward looking EV policy.
A thriving, clean electricity-based transportation sector in Gujarat can bring enormous benefits — driving economic recovery, creating new jobs, reducing dependence on imported oil, improving air quality, and avoiding greenhouse gas emissions. Although it would be fair to say that policy implementation may face challenges, a robust framework and periodic review can help unlock this billion-dollar EV opportunity and drive green economic recovery in the post-COVID world.
Both Nitish Arora and Charu Lata are Electric Mobility and Clean Energy Experts working as consultants with NRDC’s India Program.