The Uttar Pradesh (“UP”) Government has, reportedly, notified the Electric Vehicle Manufacturing & Mobility Policy 2022 (“EV Policy”) with retrospective effect from 14th October 2022, thereby exempting EVs from road tax and registration fees if purchased in the first three years of the implementation of this policy. The definition of an Electronic Vehicle (“EV”) includes all automobiles that use an electric motor driven either by batteries, ultra-capacitors, or fuel cells. It explicitly includes within its scope the following types of EVs – 2-wheeler, 3-wheeler, and 4-wheeler Strong Electric Vehicles, Plug-in Hybrid Electric Vehicles, Battery Electric Vehicles, and Fuel Cell Electric Vehicle.
The EV Policy is notified with the aim to promote the adoption of EVs and clean mobility solutions in the state of UP. Further, the EV Policy seeks to make UP a preferred investment jurisdiction at a global level to develop the EV ecosystem. To achieve the above-stated goals, the EV Policy seeks to stimulate both the demand (by encouraging rapid transition in the transportation system) and supply side (by promoting the manufacturing ecosystem for EVs, EV components, EV batteries/fuel cells, etc.). The EV Policy also addresses the need to create adequate infrastructure to promote the EV ecosystem.
It identifies the creation of charging infrastructure, faster EV adoption, and manufacture of EV/battery as the three pillars of the promoting EV industry in UP. The Infrastructure and Industrial Development Department (“IIDD”) will act as the nodal department under this policy for building charging facilities and for manufacturing EVs and EV components. The Transport Department under the UP Government shall be responsible for promoting the adoption of EVs in the state. The Electric Vehicle Manufacturing and Mobility Policy released in August 2019 stands repealed with the notification of the EV Policy.
The exemptions/subsidies offered under the EV Policy are as follows:
Promoting the Creation of Charging Infrastructure
The initiatives undertaken to promote the creation of charging infrastructure, inter alia, include the development of charging infrastructure every 25 km along expressways/highways, metros stations, petrol pumps, government public parking spaces, shopping malls, etc. It shall also provide a single platform for facilitating and ensuring inter-departmental coordination for processing applications for necessary approvals/NOC/clearances.
The EV Policy aims to establish at least 20 charging stations and 5 swapping stations in each district during the policy period. Amongst other financial incentives, the EV Policy also provides the following fiscal incentives to service providers for the establishment of charging infrastructure:
- Providing a one-time capital subsidy on eligible fixed capital investment at the rate of 20% subject to a maximum of INR 10 lakh per unit to the first 2000 charging stations in the state of UP.
- Additionally, the EV Policy will provide a one-time capital subsidy to swapping stations on eligible fixed capital investment at the rate of 20% up to a maximum of INR 5 lakh per unit to the first 1000 swap stations.
Faster Adoption of EVs in the State
The EV Policy seeks to introduce initiatives to promote faster transition and adoption of EVs in the state which, amongst other things, include the introduction of e-routes for e-buses to operate on identified routes, adoption of EVs as government vehicles (for official use) by 2030, encouraging government employees to purchase EVs through “Vehicle Advances” provided to them.
Further, to catalyze the adoption of EVs in the state, the EV policy also introduces financial incentives which include among other such incentives – exemption from the registration fees and road tax for all EVs registered and purchased in UP over a period of three years from the notification of the EV Policy. Additionally, the tax exemption will continue to operate on EVs in the 4th and 5th years if the EV was manufactured, purchased, and registered in UP.
Manufacturing of EVs, EV batteries, charging equipment, etc.
The EV Policy further proposes initiatives to promote the manufacturing of EVs, EV batteries, charging equipment, and other related components in the state of UP. These initiatives include the promotion of EV clusters, the promotion of manufacturing of both EVs and EV batteries to reduce the cost of manufacturing, the preparation of a land bank in consultation with IIDD for the potential investors in the EV industry in UP, etc.
The EV Policy also introduces fiscal incentives which include, inter alia, providing capital subsidy at the rate of 30% of eligible fixed capital investment subject to a maximum of INR 1000 crores per project over a period of 20 years in equal annual installment to the first two Integrated EV project and to the first two Ultra-Mega Battery project.
Our Take:
The EV Policy seeks to catalyze the adoption of EVs in the state of UP. Additionally, it introduces fiscal incentives which will further transform UP into a preferred jurisdiction for manufacturing EVs, EV batteries, and other related components. The initiatives sought to be introduced shall further promote ease of doing business in the state which will make UP an attractive investment destination for the EV ecosystem.
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