EV Ready India: Union Policy Updates 2024
Author: Meheli Roy Choudhury; Editor: Pradeep Karuturi
India’s electric vehicle (EV) landscape is evolving rapidly, driven by ambitious goals of decarbonisation of the mobility sector, enhancing energy security, aiming for localisation of manufacturing processes and promoting sustainable transportation. Over the last few years, India has implemented many policies at the central and state level to the effect of advancing EV adoption. Such policies aim at the demand and supply side, covering stakeholders such as manufacturers to consumers throughout the extent of the EV value chain.
This blog is a working document designed to track all significant union-level policy updates for 2024 in the EV space. It will be periodically updated with new policy notifications, and amendments to existing policies as they are announced. As a living document, it will capture the latest trends and shifts in government priorities and reflecting how these policies impact various stakeholders, from manufacturers and fleet operators to individual consumers.
Scheme to Promote Manufacturing of Electric Passenger Cars in India
India’s electric mobility transition is looking towards an enhanced focus and a policy priority to position India as a major global hub for the manufacturing of electric vehicles (EVs). This is in line with the flagship “Make in India” campaign and in spirit with the “Atmanirbhar Bharat” initiative, which the Government of India is spearheading to bring in domestic investment, self-reliance and technological advancement. It aims to provide import duty concessions for companies setting up manufacturing units in the country with a minimum investment of $500 million in three years for manufacturing of E-4Ws. It has been notified that EVs of a minimum value of $35000 can be imported at 15% duty up to the year 2031 by companies that set up manufacturing facilities under the scheme. The approved applicant will be required to achieve a minimum Domestic Value Addition (DVA) of 25% by 3 years and 50% within a period of 5 years from the date of issuance of the approval letter by the Ministry of Heavy Industries (MHI).
This policy titled Scheme to Promote Manufacturing of Electric Passenger Cars in India announced on March 15, 2024, is poised to bring in a larger quantum of investments, offer a larger variety of eco-friendly premium-quality, high-end EVs, create opportunities for upskilling, job creation, ensure a domestically oriented supply chain in India. It has garnered positive attention as a forward-looking policy within the automobile sector, public and private players inclusive. Additionally, this is a green signal to re-direct foreign investment from big global players such as Tesla, VinFast, and Jaguar Land Rover to locally invest in setting up manufacturing plants and developing the EV production ecosystems.
The Union Budget 2024–25 presented on July 23rd 2024, by Finance Minister Nirmala Sitharaman announced various measures to support the development of the EV sector in India. The budget highlighted the need to reduce dependency on critical minerals sourced from other countries by announcing a full 100% exemption of customs duties on 25 critical minerals. These are essential and used in the manufacturing of EV batteries which typically account for 40% of the cost of a vehicle. Hence, reducing the customs duties on these minerals will help lower the battery manufacturing costs, eventually percolating to reducing the cost of EVs as well.
The following minerals which are instrumental within the EV ecosystem are listed under customs exemption, as per Table 1:
In addition, a Critical Mineral Mission has been announced which will assess the avenues for domestic production, recycling of critical minerals, and reduce overseas acquisition of critical mineral assets. This has positive implications for the EV sector since these exemptions will drive down the costs associated with battery manufacturing and hence, make EVs more affordable in the market. India has initiated its first exploration of lithium mines in the Katshora region of Korba district, Chhattisgarh after the Geological Survey of India (GSI) confirmed the presence of significant lithium deposits. This has garnered significant attention in light of the less-than-enthusiastic response to the lithium block auction in J&K earlier this year.
The Prime Minister’s E-DRIVE (Electric Drive Revolution in Innovative Vehicle Enhancement) scheme was announced on September 11, 2024. Highly anticipated since the FAME 2 scheme ended on March 31, 2024, PM E-DRIVE is positioned as a natural continuation of the legacy of FAME, however, with some much-awaited and interesting revisions.
The new policy has an outlay of Rs. 10,900 crore for a period of 2 years with policy provisions in favour of e-buses, e-trucks, charging infrastructure, and testing agencies. It has a forward-looking vision by bringing in e-ambulances in the bid towards integrating comfortable patient transport within the ambit of clean mobility, a first for the country, joining USA and UK in this endeavour. The following image 3 shows the allocation of the policy outlay across different categories. Interestingly e-buses have been kept outside of the other components for which demand incentives are allocated and has a major share of allocation for its expansion. This highlights the center stage spotlight which e-buses have received in the Indian EV ecosystem:
Demand incentives have been a central part of the policies driving EV adoption. Keeping up with this, PM E-DRIVE lists e-2Ws, 3Ws, e-ambulances, e-trucks and e-buses as the components covered within it. The share of these vehicles supported under the banner of demand incentives is depicted in Table 2:
It is noteworthy that 4Ws as a separate category was not mentioned in the revised scheme. Though the scheme doesn’t mention the number of e-trucks and e-ambulances which must be sanctioned, they have been allocated Rs. 500 crore, respectively. With trucks, incentives will be given to those who have a scrapping certificate from MoRTH-approved vehicles scrapping centres (RVSF).
To address range anxiety and support the growth of electric vehicle charging infrastructure, Rs. 2,000 crore will be used to install public charging stations in cities with high EV penetration and along selected highways. Table 3 shows the number of fast chargers to be installed corresponding to the vehicle categories as per the notification.
The scheme seeks to introduce a streamlined mechanism for availing demand incentives through aadhaar authenticated e-vouchers, ensuring transparency, targeted delivery, and better monitoring of benefits. These e-vouchers can be redeemed directly at authorized EV dealerships, thereby simplifying the process for consumers and improving the efficiency of subsidy disbursements, provides end-to-end visibility, thus, marking it a significant step forward in promoting EV adoption across the country.
PM-eBus Sewa-Payment Security Mechanism (PSM) scheme
The PM-eBus Sewa-Payment Security Mechanism (PSM), a Government of India initiative, announced on September 11, 2024, is designed to support the rollout and financial sustainability of electric buses (e-buses) across India. The scheme forms part of the PM-eBus Sewa program, which aims to enhance urban mobility and public transportation through the adoption of electric buses in cities and towns.
PSM has been approved for the operation and procurement of e-buses by public transport authorities (PTAs) with an outlay of Rs.3,435.33 crore. This scheme will support the deployment of more than 38,000 electric buses (e-Buses) from FY 2024–25 to FY 2028–29.
There are growing concerns about the hitherto lower operational costs of e-buses. To tackle this issue, Public Transport Authorities (PTAs) are adopting electric buses through the Gross Cost Contract (GCC) model under public-private partnerships. The model below is the diagrammatic representation of the GCC model.
In this model, PTAs avoid paying upfront for the buses; instead, Original Equipment Manufacturers (OEMs) or operators handle procurement and operations, with PTAs making monthly payments. However, OEMs and operators remain cautious due to the risk of payment defaults. The Payment Security Mechanism (PSM) scheme aims to resolve this by ensuring timely payments through a dedicated fund. In cases where PTAs default on payments, CESL, the implementing agency, will cover the amount from the scheme’s funds, with PTAs, states, or union territories reimbursing the fund later.
Guidelines for Installation and Operation of Electric Vehicle Charging Infrastructure 2024
The Ministry of Power (MoP) issued the guidelines for the EV charging infrastructure on September 18, 2024, making it applicable to manufacturers, owners and operators of EV charging stations, power utilities and central, and state agencies. Details about the guidelines can be understood through Table 4.
Together with strong governmental support and public participation, India’s EV policy landscape is undergoing a critical transformative phase, driven by the need for sustainability, energy security, and robust investment climate. These recent updates signal a clear commitment to fostering a holistic approach to addressing both demand and supply challenges. As India continues to scale up EV infrastructure, charging networks, and local manufacturing, the country is well-positioned to become a global leader in the electric mobility transition.
References:
- https://pib.gov.in/PressReleseDetailm.aspx?PRID=2036276
- https://pib.gov.in/PressReleasePage.aspx?PRID=2035601
- https://timesofindia.indiatimes.com/business/india-business/budget-2024-fm-announces-exemption-of-customs-duty-on-critical-minerals/articleshow/111952629.cms
- https://cleanmobilityshift.com/policy-regulation/union-budget-2024-key-highlights-for-indias-electric-vehicle-industry/#:~:text=The%20scheme's%20first%20phase%20
- https://www.business-standard.com/opinion/editorial/pm-e-drive-ebus-sewa-how-the-schemes-may-help-accelerate-ev-adoption-124091201363_1.html
- https://powermin.gov.in/sites/default/files/webform/notices/Guidelines_and_Standards_for_EVCI_dated_17_09_2024.pdf
- https://pib.gov.in/PressReleseDetailm.aspx?PRID=2054191®=3&lang=1
- Cabinet approves PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) Scheme with an outlay of Rs.10,900 crore over a period of two years. (n.d.). https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2053959
- Choo, C. (2024, July 23). S&P Global Commodity Insights. S&P Global. https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/metals/072324-india-exempts-critical-minerals-from-customs-duties
- Team, C. (2023, September 3). Maharashtra seeks bids: 22 EV charging stations. CONSTRUCTION WORLD. https://www.constructionworld.in/energy-infrastructure/power-and-renewable-energy/maharashtra-seeks-bids--22-ev-charging-stations/43927
