Government Launches ₹5 Billion Program to Promote Electric Mobility

The program is scheduled from April 1, 2024, to  July 31, 2024

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The Ministry of Heavy Industries (MHI) has launched the Electric Mobility Promotion Program 2024 with a funding of ₹5 billion (~$60.34 million). The program is scheduled from April 1, 2024, to  July 31, 2024, and targets electric two-wheelers and three-wheelers, including e-rickshaws, e-carts, and L5 category vehicles.

The program will offer incentives only to vehicles equipped with advanced batteries to promote the use of cutting-edge technology. A majority of the budget, ₹4.93 billion (~$59.61 million), is allocated for subsidies and demand incentives for buyers of these vehicles.

The rest, ₹64.5 million  (~$778,416), will cover the program’s administrative costs, including information, education, and communication activities, and fees for the project management agency.

The program plans to support 372,215 electric vehicles (EVs), which include 333,387 electric two-wheelers and 38,828 three-wheelers. Of the three-wheelers, 13,590 are rickshaws and e-carts, and 25,238 are in the L5 category. L5 vehicles are three-wheeled motor vehicles with a maximum speed exceeding 25 kmph or motor power exceeding 0.25 kW.

Registered electric two-wheelers will receive an incentive of ₹5,000 (~$60)/ kWh, capped at ₹10,000  (~$120) per vehicle, with a maximum ex-factory price of ₹150,000 (~$1,810) to avail incentive.

Similarly, registered e-rickshaws and e-carts will receive ₹5,000 (~$60)/ kWh, capped at ₹25,000  (~$301) per vehicle, with a maximum ex-factory price of ₹250,000 (~$3,017) to avail incentive.

Registered electric three-wheelers in the L5 category will receive ₹5,000 (~$60)/ kWh, capped at ₹50,000 (~$603) per vehicle, with a maximum ex-factory price of ₹500,000 (~$6,035) to avail incentive.

Original Equipment Manufacturers (OEMs) must be registered with the Ministry, and each EV model needs approval from MHI.

The mandatory warranty period for electric two-wheelers is set at three years or 20,000 km run, whichever comes earlier. Similarly, for electric three-wheelers (e-rickshaw and e-cart), the warranty extends to three years or 40,000 km run, whichever occurs first.  The warranty duration for electric three-wheelers under the L5 category is also three years or 80,000 km run, whichever happens first.

The program focuses on making public transportation cheaper and more eco-friendly. It will mainly apply to electric two-wheelers and three-wheelers used for commercial purposes. Private or company-owned electric two-wheelers can also benefit from this program.

The demand incentive will be distributed using an electronically-enabled framework and mechanism established by MHI. Vehicle manufacturers must submit their requests for reimbursement of the demand incentive to MHI monthly for processing and settlement.

The program focuses on making public transportation cheaper and more eco-friendly. It will mainly apply to electric two-wheelers and three-wheelers used for commercial purposes. Private or company-owned electric two-wheelers can also benefit from this program.

The initiative includes a Phased Manufacturing Program to boost domestic manufacturing and strengthen the EV supply chain.

Recently, the ministry enhanced the budgetary outlay of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles Program from ₹100 billion (~$1.20 billion) to ₹115 billion (~$1.38 billion) to encourage India’s transition to clean mobility. The subsidies for demand incentive will be eligible for electric two, three, and four-wheelers sold until March 31, 2024.

Last March, a parliamentary committee recommended that the FAME program be extended by two years beyond the current March 31, 2024 deadline, as it felt that removing government subsidies for EVs would make the vehicles expensive.

As of December 31, 2023, subsidies amounting to ₹52.28 billion (~$627 million) were provided to EV manufacturers on the sale of ~1.15 million vehicles.

With 1.53 million units sold in India in 2023, EV sales saw a 50% year-over-year jump. EVs accounted for nearly 6.4% of overall automobile sales during the year.

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