Electric vehicles charged up by policy intervention

Sarthak Advocates & Solicitors | View firm profile

Authored by Abhishek Tripathi and Anura Gupta

Published at India Business Law Journal

To encourage e-mobility, the government of Delhi has introduced the Electric Vehicle Policy, 2020. The policy proposes measures to boost the adoption of electric vehicles (EV) by providing long-term benefits for the purchase of EVs in order to bring about sustainable mobility in Delhi.

The policy proposes incentives of up to ₹30,000 (US$400) per vehicle for the purchase of two-wheelers, while the first 1,000 e-cars to be registered in Delhi under the policy will attract purchase incentives of up to ₹150,000 per vehicle. Leading by example, the government of the National Capital Territory of Delhi is proposing to change its entire fleet of cars to EVs within 12 months of the introduction of the policy. Logistics and food delivery service providers will receive financing support from the Delhi Finance Corporation (DFC) when they reach stipulated thresholds. This should encourage such service providers to shift to electric two-wheelers.

The policy makes it easier to purchase EVs by offering interest subvention on borrowings. An interest subvention of 5% is to be offered for the purchase of e-autos, e-rickshaws, e-carts and e-goods carriers, provided that the loan is obtained from the DFC or other scheduled banks and non-banking finance companies on the panel of the DFC. To further encourage the purchase of EVs, the policy waives registration fees and road taxes for all EVs sold with batteries.

To fund these incentives, the policy will impose feebates or surcharges on inefficient polluting vehicles; efficient ones will receive a rebate. A state EV fund will be created by aggregating the pollution cess [a local tax for specific purposes], additional road taxes on petrol and diesel cars, especially luxury vehicles, and congestion fees on rides originating or ending in Delhi. In a first of a kind initiative, the policy proposes additional incentives on the scrapping and deregistering of old internal combustion engined vehicles and the purchase of EVs. Those who scrap their old vehicle will receive a reduction in the price of a new EV.

To make EVs a viable mode of transport, the policy envisages the creation of a public as well as a domestic charging infrastructure. For domestic charging, changes in building bye-laws are proposed to ensure that all new home and workplace parking spaces are EV ready, with 20% of parking spaces equipped with charging facilities. To encourage the installation of charging points in residential and non-residential buildings, a purchase incentive of ₹6,000 per charging point for the first 30,000 such charging points will be offered. For public charging infrastructure, the policy aims at providing such facilities every three kilometers in Delhi. A working group on the accelerated rollout of a charging Infrastructure in Delhi has been given the task of identifying energy operators and locations for the installation of such a charging network.

In addition to providing a range of incentives for EV adoption, the policy also addresses the issue of the disposal of EV batteries in such a way that prevents environmental damage. The policy encourages the reuse of batteries and the setting up of facilities to recycle spent batteries. This will focus on the recovery of rare materials from them. However, this needs more consultation, particularly with regard to the reuse of batteries. Clear guidelines should be issued to prevent damage to the environment by recycling.

The government of Telangana has also announced its EV policy. In addition to offering incentives to purchase EVs and the waiver of registration fees, the Telangana policy also promotes long-term investment in the EV industry by providing such incentives as capital investment subsidies, power tariff discounts and interest subvention. In addition, the government has proposed the setting up of energy and EV parks to boost manufacturing in the state. In many ways, Telangana, particularly Hyderabad, has led the way in the provision of a public EV charging infrastructure. By promoting EV manufacturing in Telangana, its government hopes to attract investment and to boost employment.

While Delhi’s EV policy is focussed more on encouraging end consumers, Telangana has expanded the scope of its EV policy by attempting to create a manufacturing base. These policies would appear to be moving in the right direction, but implementation will be the key to success. If the policies are properly implemented, they will help to create an ecosystem that makes the transition to EVs easier. It is a transformation waiting to happen and policies can make it a reality. This transformation will also help to retain the environmental benefits incidentally brought about by covid-19.

Abhishek Tripathi is the managing partner and Anura Gupta is a principal associate at Sarthak Advocates & Solicitors.

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