Kerala Budget Proposes ₹2.5 Billion Loan for Rooftop Solar, Cuts Tax on EVs

Subsidy of ₹25,000 to ₹30,000 offered for electric rickshaws


Kerala’s Finance Minister Thomas Isaac announced a 50% reduction in motor vehicle tax for electric, fuel cell, and full hybrid battery electric vehicles (EV) for five years in the state’s budget for 2021-2022.

About 2,000 EVs have been registered in the state. The subsidy will encourage the adoption of more such vehicles, the Minister said.

Isaac said Kerala Automobiles Limited had started the production and export of electric rickshaws. A subsidy of ₹25,000 (~$342) to ₹30,000 (~$410) would be provided for the first 10,000 units.

He announced that the Kerala State Electricity Board (KSEB) plans to install 236 electric vehicle charging stations in 2021-22. The state also hopes to deploy EVs for use by government officials and agencies.

The Minister said 3,000 of the Kerala State Road Transport Corporation’s diesel engine vehicles would be converted to liquified natural gas (LNG) and compressed natural gas (CNG)-based engines.

The Kerala Finance Corporation will provide loans to purchase electric cars at an interest rate of 7%. It will also provide loans at 10% to convert diesel buses to LNG or CNG.

Isaac said the project to convert streetlights to LED-based lights would be completed in a few months with support from the Kerala Infrastructure Investment Fund Board (KIIFB). The state plans to pay back the loan using the savings made from its reduced electricity bills.

The KIIFB will also provide ₹2.5 billion (~$34.2 million) for installing small-scale rooftop solar projects under the renewable energy service company (RESCO) model. This amount will be recovered over the next five years.

The state also announced incentives to promote the construction of eco-friendly buildings. It hopes to form a policy that will prescribe standards for power wastage, water conservation, and eco-friendly construction methods.

Buildings that adhere to these standards would be able to benefit from a 50% reduction in one-time building tax, a 1% reduction on stamp duty during transactions, a 10% reduction in electricity tariff for five years if a 20% power saving target is achieved, and a 20% reduction in local building tax.

Solar panels will be installed in all public schools in the state as part of a ₹1.2 billion (~$16.4 million) package for improving their infrastructure and facilities, as per the state budget.

In its budget for 2019-2020, Kerala had announced measures to promote rooftop solar projects while also pushing for the development of the EV sector.

In June 2020, Kerala State Electricity Board Limited invited bids from engineering, procurement, and construction contractors to install 26 EV charging stations at various government-owned locations. In July 2020, it empaneled eight bidders to set up EV charging stations for commercial operations across the state.