Uttar Pradesh Announces a Slew of Incentives for EV and Battery Manufacturing
The policy targets a 100% transition of government vehicles to EVs by 2030
October 17, 2022
Uttar Pradesh will provide a 30% base capital subsidy for the first two integrated electric vehicle (EV) and ultra-mega battery projects up to a maximum of ₹10 billion (~$121.43 million).
The minimum investment to set up a manufacturing plant must be ₹15 billion (~$182.14 million), and the minimum production capacity must be 1 GWh. The capital investment subsidy will be provided for 20 years in equal annual installments.
The incentives were announced in the recently released ‘Uttar Pradesh Electric Vehicle Manufacturing and Mobility Policy 2022.’ Invest UP, the investment promotion and facilitation agency of the UP government will be the nodal agency.
Each of the first five mega EV and battery projects will receive up to 20% of the investment, up to a maximum of ₹5 billion (~$60.71 million). Subsidies will be paid out in equal annual installments over ten years.
Large EV and battery projects will receive up to 18% of the investment, up to ₹900 million (~$10.92 million). The subsidies will be paid over ten years in equal installments.
Micro, Small, and Medium Enterprises (MSME) projects will be provided a capital subsidy of 10% of eligible capital investment up to ₹50 million (~$607,134). Subsidies will be paid out in equal annual installments over two years.
The policy will be valid for five years.
To ensure that the beneficiaries optimally utilize the installed capacity, gross capacity utilization multiple (GCM) will be considered as 1 for the first year, provided the capacity utilization for the unit is 40% of the installed capacity. For the subsequent years, GCM will be 1, provided the peak capacity utilization of that year is 75% or more of the installed capacity.
Once commercial production begins, the stamp duty paid on the land purchased or leased to set up an integrated EV or ultra-mega battery project will be completely reimbursed.
Large and MSME EV and battery projects that obtain certification up to ₹1 million (~$12,149) per unit will be reimbursed half of their quality certification charges. For large and MSME EV and battery projects acquiring international patents, 75% of the expenditures incurred, up to ₹200,000 (~$2,429), will be reimbursed. The reimbursement for acquiring domestic patents will be capped at ₹50,000 (~$607).
The state government targets a 100% transition of government vehicles for official use to EVs by 2030.
There will be a 15% subsidy on the ex-factory price of electric two-wheelers (E2Ws) up to ₹5,000 (~$60) per vehicle. The maximum budget expenditure for E2Ws is ₹1 billion (~$12.1 million), and 200,000 E2Ws will receive the subsidy.
Electric three-wheelers (E3Ws) will receive a 15% subsidy on the ex-factory price of up to ₹12,000 (~$145) per vehicle. The maximum budget expenditure for E3Ws is ₹600 million (~$7.26 million), and 50,000 E3Ws will receive the subsidy.
A 15% subsidy will be provided on the ex-factory price of electric four-wheelers (E4Ws) up to ₹100,000 (~$1,210) per vehicle. The maximum budget expenditure for E4Ws is ₹2.5 billion (~$30.25 million), and 25,000 E4Ws will receive the subsidy.
Registration fees and road tax will be exempted for EVs purchased and registered in UP in the first three years of the policy period. To avail of registration fees and road tax exemption in the last two years of the policy period, the EVs must be manufactured, purchased, and registered in the state.
The first 2,000 charging stations will receive a capital subsidy of 20% or up to ₹500,000 (~$6,051) each on the eligible fixed capital investment. The first 1,000 swapping stations will receive a capital subsidy of 20% or up to ₹500,000 (~$6,051) each.
Land will be leased at ₹1 (~$0.012)/kWh in a revenue-sharing model for ten years to set up charging stations.
Charging and swapping stations having cumulative contract demand of a minimum of 1 MW can procure through open access.
Charging and swapping infrastructure will be built in a grid of 3km X 3km in cities and urban conglomerates. Charging infrastructure will be promoted at a 25 km distance along expressways and highways.
The state government will promote the setting up of collection centers for end-of-life batteries at dealerships of EVs and battery manufacturers in consultation with the UP Pollution Control Board for battery recycling at these centers. The government will also promote battery disposal facilities at swapping and charging stations.
Recently, in its State Electric Vehicle Policy, Chandigarh announced that 70% of all new vehicle registrations in the Union Territory to be EVs in the next five years.
Chhattisgarh has set a target of achieving 15% of all vehicle registrations to be EVs by 2027.