Delhi’s Electric Vehicles Market: Subsidies, Other Incentives

• The Delhi Electric Vehicles Policy, 2020 came into effect August 7, 2020 and will be valid for a period of three years.
• The policy subsidizes the purchase of new electric vehicles based on their battery capacity as well as scrapping incentives for old internal combustion engines where applicable.
• Once the system for processing subsidies is established, the subsidy amount will be transferred electronically to the owner’s bank account within seven days.
• The incentives aim to promote greater adoption of EVs among two-wheelers, public transport vehicles, and goods carriers.

As India’s automotive industry opens up to the need for alternate energy consumption and overall reduction of emission levels, the electric vehicles (EVs) segment has received a boost from the capital.

On August 7, the Delhi government approved the Delhi Electric Vehicles Policy, 2020 – notified with immediate effect. The policy will be valid for a period of three years from the date of its notification.

With the objective to establish “Delhi as the EV capital of India”, the policy provides direct incentives to kick-start the adoption of EVs across most vehicle categories, including two-wheelers, three-wheelers, passenger vehicles, public transport vehicles, and goods carriers. The policy also entails incentives for setting up public and private charging infrastructure, favorable electricity tariffs for energy operators, and measures to stimulate jobs through training and R&D.

The fiscal incentives in the policy will be in addition to those available in the FAME India Phase-II scheme of the central government (see last section).

Here we spotlight key aspects of Delhi’s EV policy, which seeks to stimulate the local market demand for electric vehicles.

Incentives to create an EV ecosystem in Delhi

The goal of the policy is to have battery electric vehicles account for 25 percent of new vehicle registrations in Delhi by 2024. This could significantly reduce pollution levels in the city and bring down emissions from the transport sector.

The policy also promotes measures to support the creation of jobs in driving, selling, financing, servicing, and charging of EVs.

Incentives in the Delhi Electric Vehicles Policy cover the following verticals:

• Financial incentives – includes incentives on purchase, scrapping, and interest subvention on loans;
• Waivers – of road tax and registration fees;
• Infrastructure – establishing a wide network of charging stations and swappable battery stations as well as private charging capacity at homes and workplaces;
• Database – to be made public on the network of stations for EV charging, battery management;
• Regulatory certainty and market viability – by constituting the State Electric Vehicle Board, setting up a dedicated EV cell, and promoting public awareness;
• Job creation – skills development, research, and training related to the EV ecosystem (for example, e-auto and e-cab drivers, charging station operators, and EV service mechanics) as well as developing technology for improving design, usage, and efficiency of EVs; and
• Recycling system – setting up recycling businesses in collaboration with battery and EV manufacturers that focus on ‘urban mining’ of rare materials within the battery for re-use by battery manufacturers.

Subsidy-based incentives to promote widespread adoption

The Delhi government will offer a subsidy of INR 5,000/kWh (US$68/kWh) or up to INR 150,000 (US$2,043) for purchase of electric four-wheelers and INR 30,000 (US$408) for EV two-wheelers. (US$1=INR 73.42)

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The policy also calls for the creation of a “non-lapsable” State EV Fund – to be funded through the air ambience fund, levy of additional taxes, cess, fee, etc. on inefficient or polluting vehicles.

The Delhi Electric Vehicles Policy, 2020 details the incentives available to each category of vehicle based on meeting certain criteria threshold – see here for official document.

For example, electric two-wheelers need to fulfill certain criteria, shown in the table below, for their registered owners to access purchase incentives and apply for incentives for scrapping older vehicle internal combustion engines, among other subsidy measures.

Expanding private charging infrastructure capacity

The Delhi government will also be changing building by-laws so that new homes and workplaces ensure that 20 percent of all vehicle holding capacity/ parking infrastructure is ‘electric vehicle ready’ (that is, with conduits and power supply infrastructure in place for EV chargers). Additionally, the building premises must have an additional power load, equivalent to the power required for all charging points to be operated simultaneously, with a safety factor of 1.25.

Meanwhile, existing residential and non-residential building owners will be encouraged to install private charging points (PCPs) within their premises and provide shared access to EV charging for residents of group housing societies and multi-story apartment complexes. The Delhi government will provide a grant of 100 percent for the purchase of charging equipment up to INR 6,000 (US$82) per charging point for the first 30,000 charging points. Grants shall be available for chargers that are either single phase or three phase input but comply with all other BEVC–AC001 specifications.

Expanding public charging infrastructure capacity

The policy aims to establish public charging facilities within 3 km travel from anywhere in Delhi. Energy operators’ (EOs) will be invited to set up charging and battery swapping stations across Delhi in multiple phases by porting and providing concessional locations for charging station at bare minimum lease rentals. These concessional locations will be carved out from existing public parking zones and other Delhi government-identified locations, such that they offer easy entry and exit. The Delhi government will provide a capital subsidy for the installation cost of chargers and such expenses to the selected EOs. No further capital subsidies can be claimed if the EOs avail this subsidy. 100 percent of the net SGST (state goods and services tax), accrued to the Delhi government, will be provided as reimbursement to the EOs for purchase of advanced batteries to be used at swapping stations.

What is FAME India – the national scheme to promote EVs and hybrid vehicles?

The National Electric Mobility Mission Plan (NEMMP) 2020 provides the vision and roadmap for the faster adoption of electric vehicles and their manufacturing across India. The plan was designed to improve national fuel security, ensure affordable and environmentally friendly transportation, and facilitate manufacturing capacity for the Indian automotive industry.

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As part of NEMMP 2020, the Department of Heavy Industry launched the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME India) scheme in 2015 to promote manufacturing of electric and hybrid vehicle technology and to ensure sustainable growth of the same.

Initially approved for a period of two years, the scheme has been extended multiple times. Last year, FAME India Phase-II was rolled out, to be implemented over a period of three years with effect from April 1, 2019.

Phase I of the FAME India scheme was implemented through four focus areas namely demand creation, technology platform, pilot projects, and establishing charging infrastructure. In this phase, market creation through demand incentives was aimed at incentivizing all vehicle segments – two-wheelers, three-wheelers, passenger vehicles, light commercial vehicles, and buses. The demand incentive was available to buyers of electric and hybrid vehicles in the form of an upfront reduced purchase price. Further, specific projects under pilot projects, research and development, technology development, and public charging infrastructure components were sanctioned by the Project Implementation and Sanctioning Committee (PISC) for extending grants under the different focus areas of the scheme.

Phase II of the FAME India scheme will mainly focus on supporting electrification of public and shared transportation and aims to support through subsidies for electric buses and electric two-wheelers, three-wheelers, and four-wheelers. The scheme will be applicable mainly to vehicles used for public transport or those registered for commercial purposes. However, private electric two-wheelers will also be covered under the scheme as a mass segment. The creation of charging infrastructure will be supported in selected cities and along major highways.

Some recent developments

In January this year, the Department of Heavy Industry sanctioned 2,636 charging stations in 62 cities across 24 states and union territories (UTs) under FAME India Phase II. The public entities will be selected after ensuring the availability of land for charging stations, signing of necessary agreements/MoUs with concerned partner organizations like city municipal corporation, power distribution companies, and oil companies. Subsequently, the respective public entities must initiate the procurement process in a time bound manner for establishing the sanctioned charging stations.

On April 27, 2020, the validity of FAME-II certificates issued for one year from April 1, 2019 to March 31, 2020 – for all EV models (e2W, e-3W, and e-4W) – were extended to June 30, 2020 due to the disruption caused to the market by the coronavirus outbreak.

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