Tamil Nadu EV policy seeks to attract Rs 50,000 cr, create 150,000 jobs

Venture fund for start-ups in this space, 100% reimbursement of SGST on EV sales, zero electricity tax are some of the measures set out in the policy

The Tamil Nadu government hopes to attract investments worth Rs 50,000 crore in the electric vehicle space, while establishing the state as a hub for these vehicles by developing an EV ecosystem. The state, which unveiled a new EV policy today, also seeks to create 150,000 new jobs.

Motor vehicle registrations in Tamil Nadu have risen 12.4 per cent a year to over 27.7 million in 2019 from 321,000 in 1981. EV penetration at the end of phase-I of FAME remained low. According to the policy document released by Chief Minister K Palaniswami, a dedicated strategy is needed to address EV prices, create public charging infrastructure and spur investments, in order to promote adoption of such vehicles.

The government will also create an EV Venture Capital Fund to offer financial support to start-ups in this space, in order to enable them to scale up their businesses.

The objective is to create robust EV infrastructure, such as adequate power supply and network of charging points with favourable power tariff, to make Tamil Nadu the preferred destination for EV and component manufacturing units.

Under a special manufacturing package, the government will offer a 100 per cent reimbursement of State Goods and Services Tax (SGST) on sale of EVs made, sold and registered within Tamil Nadu. This facility will be available till December 2030. A capital subsidy of 15 per cent for investments spread over 10 years will be provided till December 2025 for intermediate products in EV and charging infrastructure, in cases where SGST reimbursement does not apply. Industries operating in this space will also be completely exempt from electricity tax till December 2025.

The state has also announced subsidies on the sale or lease of land manufacturing EVs and creating charging infrastructure, apart from an incentive for creating jobs in the sector.

The government will develop exclusive EV parks in major auto manufacturing hubs to create a vendor ecosystem and promote logistics parks and free trade warehousing zones for better inventory management. Special incentives will be provided for MSMEs.

The State has set itself a target to have all auto rickshaws, taxis and app-based transport operators and aggregators converted to electric within 10 years in six major cities -- Chennai, Coimbatore, Trichy, Madurai, Salem and Tirunelveli.

Electric two-wheelers will be granted complete road tax exemption till December 2022, along with a waiver on registration charges, while private cars will get a waiver on registration charges and 50-100 per cent road tax exemption till 2022. Waiver of registration tax and other incentives were also announced for other categories.

Tamil Nadu's State Transport Undertakings (STUs), which ply some 21,000 buses, would strive to replace around 5 per cent of their existing vehicles with EVs every year and around 1,000 EV buses may be introduced every year. Buses are expected to be charged at the Depots using 3-Phase electric connection, supported by small top up charging at smaller stations.

The State will invest in charging stations with active participation from public sector units such as the State discom TANGEDCO, and from private players, for whom appropriate capital subsidy will be available. The Government will undertake to set up 3x3 Grid charging stations in six major cities, with one for every stretch of 25 km on both sides of National and State Highways. Charging points will be provided in government office parking lots as well.

The policy also dwells on Public Private Partnership models. Tariff for the supply of electricity to Public Charging Stations (PCS) will be determined by the state electricity regulatory commission and it will be not more than the 15 per cent above the average cost of supply. Renewable energy will be supplied in priority for charging stations, and will come at zero connection cost.

The state has also formed a high-level steering committee to monitor the implementation of policy targets. Recycle and reuse of used batteries and disposal the rejected batteries are also part of the policy.