Tamil Nadu’s New EV Policy Aims to Mobilize ₹500 Billion for Manufacturing in the State

Tamil Nadu is looking to attract investment from EV manufacturers while creating a demand for EVs in the state through the development of required infrastructure and fiscal incentives

September 18, 2019


The government of Tamil Nadu has launched the state’s Electric Vehicle (EV) Policy 2019. The policy aims to mobilize ₹500 billion ($7 billion) investment in EV manufacturing in the state. The policy aims to create a complete EV ecosystem and charging infrastructure.

The policy has also provided various demand and supply-side incentives that are expected to encourage the adoption of electric vehicles. The state will allow the exemption of road tax on the purchase of electric two-wheelers, autorickshaws, light goods carriers, and passenger vehicles. The policy will also facilitate the waiver of registration charges for new vehicles.

The state is looking to attract EV and related industries to set up facilities in the region, and this will be through supply-side incentives such as reimbursement of Goods and Service Taxes (GST), a capital subsidy of 15%, tax exemption on electricity, and subsidies on land cost.

To boost the development of charging infrastructure, the state will invest the funds with the active participation from Tamil Nadu’s distribution company (TANGEDCO). The government is also planning on launching capital subsidies that will help private sector players invest in charging infrastructure for hotels, shopping malls, cinema halls, and apartments. According to the policy, charging stations would be developed at an interval of 25 kilometers on both sides of state and national highways. TANGEDCO is expected to set up its charging infrastructure through private players on a public-private partnership (PPP) model. The tariff for supply of electricity at public charging stations will not be higher than 15% above the average cost of supply.

A slew of other measures such as employment incentives, incentives for MSME sector, and special package for battery manufacturing have also been announced as part of the policy.

Currently, there are around 27.7 million vehicles registered in the state, and as of March 31, 2019, Tamil Nadu accounts for 6.4% of electric vehicles sold in India. Through the implementation of the policy, the state is looking to increase the share of EVs in the total vehicle population.

Tamil Nadu has joined other states and union territories announcing EV policies. The Delhi government released its draft EV policy hoping that 25% of all new vehicle registrations by 2023 will be Battery Electric Vehicles (BEVs). Uttarakhand approved a policy to promote the adoption of electric vehicles in the state, while also incentivizing EV manufacturing. With this development, Uttarakhand had become the second north Indian state to lay out a plan for manufacturing and adoption of EVs after Uttar Pradesh. Kerala’s EV policy aims at bringing one million EVs on the road by 2022 and creating a pilot fleet of 200,000 two-wheelers, 50,000 three-wheelers, 1,000 goods carriers, 3000 buses and 100 ferry boats by 2020. The Maharashtra EV policy targets at creating an enabling environment for the manufacture of 500,000 EVs in the state within the next five years.

Recently, in a positive development towards increasing electric mobility in the country, the government cut the applicable rate of GST on EVs from 12% to 5%.

 The EV market in India is buoyant amid increasing policy support from the government. The adoption of EVs in the country is poised to grow in the coming years, although battery charging infrastructure remains a valid concern among potential consumers. In a comprehensive analysis, Mercom recently analyzed India’s two and three-wheeled EV segment and who is driving the growth in this sector. Read the entire report here.



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