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Maharashtra: New e-vehicles policy to bring cut in prices, road tax

Maharashtra’s new draft Electric Vehicle (EV) Policy 2021 aims to bring at least 1,46,000 new battery-operated electric vehicles (BEVs) on state roads by 2025, estimated to comprise about 10% of all new vehicle registrations by that time
By Prayag Arora-Desai, Mumbai
PUBLISHED ON JUN 24, 2021 12:19 AM IST

Maharashtra’s new draft Electric Vehicle (EV) Policy 2021 aims to bring at least 1,46,000 new battery-operated electric vehicles (BEVs) on state roads by 2025, estimated to comprise about 10% of all new vehicle registrations by that time. The policy is likely to be cleared by the cabinet soon, said officials in the know.

The draft policy has proposed a range of sops for those purchasing EVs. These include subsidised vehicle costs, discounts for early adopters, exemption from road tax and registration fees, and providing rebates on property tax to residential establishments that invest in charging stations, among others.

The cost of EVs in the state is set to become cheaper as buyers will be able to avail incentives under the state policy as well as the Centre’s Faster Adoption and Manufacturing of Hybrid and EV (FAME) II scheme, officials familiar with the development said.

The draft policy was reviewed by chief minister (CM) Uddhav Thackeray last week. The policy aims to incentivise purchase of 100,000 electric two-wheelers, 15,000 e-autos, 10,000 cars, 20,000 goods carriers (both three and four-wheeler) and 1,000 e-buses. For each of these vehicle segments, incentives are likely to be funded from the green tax levied on polluting vehicles, said officials from the transport department.

There will also be an “early bird discount of 2,500/kWh of the vehicle battery capacity in addition to aforesaid incentives for EV purchased before December 31, 2021,” stated an official presentation made to the CM last week, by the policy’s drafting committee.

The cost of electric vehicles sold with extended battery warranty of at least five years and buyback options are proposed to be reduced even further. The cost of a single EV sold with an assured buyback guarantee stands to come down by 6% of the retail price, capped at 10,000, while the price of those sold with extended battery warranties of at least five years stands to reduce by 4% up to 6,000.

Other incentives proposed to boost consumer demand include exemption of road tax and registration charges for EVs till the year 2025 and scrappage incentives starting at 7,000 for e-two wheelers up to 25,000 for e-four wheelers.

“Operational guidelines laying down the process of incentive disbursement under the policy shall be notified within 60 days from the date of notification of the policy. The incentive disbursement process will be designed to ensure transfer of incentives to the beneficiaries within 30 days from the date of incentive application. The incentives disbursement mechanism... shall be made digital to ensure timely transfer to beneficiaries,” stated the presentation reviewed by the CM.

On the supply side, the state proposed to incentivise as many as 15,500 public and semi-public EV charging stations, though these incentives will not be available for stations already availing of benefits under FAME-II scheme. For slow charging stations up to 3.3kW, incentives will cover up to 60% of the cost of the unit — excluding cost of land — with a maximum incentive of 10,000 each.

For moderate and fast charging stations above 3.3kW, incentives will cover up to 50% of the cost, at a maximum of 500,000 each. The tariff applicable for all EV charging stations and battery swapping stations in the state has been fixed at between 4 and 6.6 per unit, as per a March 2020 order issued by the Maharashtra Electricity Regulatory commission (MERC).

The government will also create a single-window process for installing EV connections that offer EV-specific tariffs. The EV Policy 2021 also recommends that amenity spaces for EV charging stations be earmarked in development plans of various cities, and that all cities under the National Clean Air Programme prepare a charging infrastructure plan to identify potential locations that can be harnessed to set up EV charging infrastructure. “There will be a particular focus on setting up these stations in already existing petrol pumps,” said a transport department official.

Meanwhile, state industries, energy and labour departments will provide manufacturers of vehicles, batteries and other ancillary products with all benefits under the ‘D+’ category of mega projects under Maharashtra’s New Industrial Policy (2019), regardless of whether these manufacturing units will be set up. This means the state will refund 60% of total capital investment in the entity, over a period of 10 years.

Officials said the state will not be directly investing in the EV policy, but will rely on strategic, personal investments made by global players in electric mobility to boost infrastructure development. Speaking at a webinar last month, Ashish Singh, ACS transport, had said, “The state is not going to directly invest in the EV policy. Instead, we will incentivise investment from bigger players in terms of tax concessions, land availability, and so on. Till date, we have not invested any money in producing cars or internal combustion engines either.”

Importantly, urban local bodies will also provide rebates on property tax to residential establishments that set up EV charging infrastructure on their premises. In fact, the policy targets that all upcoming residential complexes should have 20% of their parking spots dedicated for EVs by 2025. Specific policy measures, details of which are not yet publicly available, have also been drafted to encourage fleet aggregators such as cab services, last-mile delivery providers and logistics companies to transition to EVs.

The policy also aims to substitute all government vehicles in major cities with EVs, starting April 2022, officials privy to the developments had confirmed last month. HT had reported the development on May 28. Other goals of the policy include converting around 25% of the existing public transport infrastructure and last-mile delivery vehicles in five major cities to fully electric mode and conversion of 15% of Maharashtra State Road Transport Corporation’s existing bus fleet of 18,000 vehicles to electric mode by 2025.

This is not the first EV transportation policy of the state. Maharashtra had earlier adopted an EV policy in February 2018 which was drafted by the state department of industries. However, that policy had focused largely on attracting investment and providing incentives to end users which, officials said, was not enough for manufacturers to enter the market. The current draft policy aims to remedy that by incentivising infrastructure creation, which will spur demand.

Avinash Dhakne, transport commissioner, could not be reached for comment. Ashish Singh, additional chief secretary, transport department, confirmed that the EV Policy 2021 is likely to receive the cabinet’s assent “very soon,” but declined to comment further.

Independent experts have viewed the draft policy favourably thus far. “Overall, demand side incentives have been made more comprehensive, with a few good practices adopted from other state EV policies (specifically Delhi’s) but also, with a few unique policies such as the early bird discount and the extended battery warranty and buyback agreement for EVs,” said Madhav Pai, executive director of the WRI India Ross Center.

Purchase subsidies are now based on battery capacity rather than base price of vehicle, allowing subsidies to be more effectively deployed. On the supply side, incentives have been provided in line with the Maharashtra Industrial Policy, with EV industries able to avail the most favourable category of incentives, experts pointed out.

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