Lakshmana Venkat Kuchi

Tamil Nadu government has begun to walk its talk, especially on the electric vehicles front – coming out with a brand new EV policy that has drawn the first concrete investment on the ground. Chief Minister MK Stalin was on hand to sign an MoU with Ola Electric that will be investing $ 920 million in the state to manufacture Electric cars and batteries. 

The new facility coming up after the government’s EV policy came out will have the capacity to produce four-wheeler electric vehicles and set up 20 GW battery manufacturing capacity with a total investment of Rs 7614 crore by the mother company Ola, through its subsidiaries Ola Electric Technologies and Ola Cell Technologies. 

The state which is already a hub of the automotive industry in the country is aggressively pursuing the possibility of becoming the EV capital of the country as well, and for this purpose has tweaked its EV policy that covers everything from batteries, charging infrastructure and more crucially, the hybrid vehicles. And for this, Chennai is arguably the most suited given the flourishing automobile manufacturing factories set in and around Chennai. 

As per the new policy, EVs that include battery electric vehicles (BEV), plug-in electric vehicles (PEV), plug-in hybrid electric vehicles (PHEV) and strong hybrid electric vehicles (SHEV) will be given exemptions from road tax, registration and permit fees, the state government said in a press statement. Depending on the battery capacity, the state will offer incentives of Rs 5,000 to Rs 10 lakh on commercial electric vehicles. IC engine to EV conversions will also be incentivized, the government said.

The state government has already chosen the cities of Chennai, Coimbatore, Tiruchirappalli, Madurai, Salem and Tirunelveli as the pilot cities for installing e-mobility solutions. Planned are incentives for charging and battery swapping stations. The state government is also examining the possibility of revising the power tariffs for the public charging stations, to encourage greater use of electric vehicles that are zero pollution emitting.

What the government has done with its new policy is to make an effort to generate employment in the setting up of the new EV ecosystem and EV value chain. What the government intends to do is to provide incentives for EV projects which will be given reimbursements for employer’s contributions to the EPF and financial support to companies engaging in EV manufacturing. Full electricity tax exemption for a period of five years is a sop that has been given clearance by the government, but the condition is that the power is purchased from a state power distribution company, or generated from captive sources. Amendments to building and construction laws are also on the anvil to ensure that the setting up of charging infrastructure is woven into the project from the planning stage itself. 

The EV policy is an effort to develop a road map to electrify public and institutional fleets operating in the state in phases. “The State shall endeavour to increase the share of electric buses to 30% of the fleet [operated by State Transport Undertakings] by 2030,” the new EV policy states. 

Recognising the need for an agile policy approach, the new policy deals with the changing dynamics of the electric vehicle sector. It tries to overcome the sectoral challenges through interventions across the supply, demand, and ecosystem segments. 

While the 2019 policy provided for a waiver of road tax, registration charges and permit fees till December 31, 2022, the latest policy extends them by three years and further provides for special demand-side incentives till March 31, 2026. However, these incentives would be applicable to vehicles manufactured, sold and registered in Tamil Nadu only.