Tamil Nadu EV Policy and Incentives
Introduction to Tamil Nadu EV Policy:
Tamil Nadu has transformed into one of India’s leading Electric Vehicle (EV) manufacturing hubs over the last five years. There has been a keen interest from the EV Original Equipment Manufacturers (OEMs) and component manufacturers who wish to establish their units in the State.
The strong manufacturing ecosystem in the State has encouraged new entrants like Ather Electric, Ola Electric, Ampere and others to establish their EV manufacturing units here. The Government of Tamil Nadu expects EVs to play a crucial role, especially in the electrification of last-mile connectivity. To support this goal, Tamil Nadu aims to electrify the vehicular fleets operating in the State by leveraging its vibrant automotive ecosystem.
The rapidly changing dynamics of the EV sector require an agile policy approach and periodic revisions. In this regard, the Tamil Nadu EV Policy 2023 covers manufacturing units engaged in the manufacturing of Electric Vehicles, EV Components, Electric Vehicle Supply Equipment (EVSE) and EV Charging Infrastructure, charging stations/charging point operators, and customers purchasing EVs in Tamil Nadu. The EVs incentivised in this policy will need to comply with FAME II guidelines issued by the Ministry of Heavy Industry, Government of India.
As a matter of fact, the State has signed MoUs with an investment interest of nearly Rs. 24,000 crores with an employment potential of 48,000 jobs in the EV value chain during the pandemic, in a motive to nurture the EV industry.
Policy Objectives – Tamil Nadu EV Policy:
- Transform Tamil Nadu into the preferred destination for EV manufacturing in South-East Asia
- Accelerate adoption of EVs in Tamil Nadu
- Enhance the EV ecosystem in Tamil Nadu
- Develop EV Cities in Tamil Nadu
Eligibility– Tamil Nadu EV Policy:
“The investment in Eligible Fixed Asset (EFA)* should be greater than Rs. 50 crore and create at least 50 direct jobs in the form of new/expansion projects. For projects with investment in EFA below Rs. 50 crores, the Tamil Nadu MSME Policy 2021 would be applicable.”
EFA – includes land (including development costs such as fencing, construction of internal roads, and other basic infrastructure facilities); permanent buildings; plants, indigenous machinery & equipment, imported equipment, computer equipment, material handling equipment (like forklifts, cranes, etc); tools, dies, moulds, jigs, and fixtures and similar production tools owned and used within the plant or elsewhere within Tamil Nadu; appliances; electrical installations; pollution control, quality control and laboratory equipment; fixtures, tubes, pipes, fittings, and storage tanks, to the extent paid for by the project.
Package– Tamil Nadu EV Policy:
The EV Special Manufacturing Package provided by the Government shall be beneficial for firms operating across the EV manufacturing value chain.
Package |
Incentive |
| Inclusion of R&D in EFA | EFA shall include the following intangible R&D-related expenditure, subject to a ceiling of up to 20% of EFA
All non-creditable taxes and duties would be included in such expenditure. |
|
Investment Promotion Subsidy |
The state can avail of incentives under one of the four options provided below based on their eligibility.
Reimbursement of SGST / Turnover based subsidy / Capital Subsidy / Special ACC Capital Subsidy. |
| Electricity Tax Exemption | Projects will be provided 100% exemption on electricity tax for a period of 5 years on power purchased from the Tamil Nadu Generation & Distribution Corporation Limited (TANGEDCO) or generated and consumed from captive sources. |
| Stamp Duty | a) Projects that obtain land by sale or lease shall be entitled to 100% exemption on stamp duty for the purchase/lease of land obtained from government agencies such as TIDCO/SIPCOT/ ELCOT till the policy period.
b) In the case of private land, a 100% stamp duty concession shall be provided as a back-ended subsidy for up to 50 acres after the commencement of commercial production or fulfilment of investment and employment commitment, whichever is earlier. |
| Subsidy on Cost of Land |
The Government strives to provide land to industries at competitive rates. For eligible projects, government industrial estates’ (SIPCOT/TIDCO/ELCOT etc.), land allotment will be made at a 10% concessional rate in “A” & “B” districts and at a 50% concessional rate in “C” districts for land up to 20% of EFA. For private land in “C” districts, a 50% subsidy will be offered on the cost of land as per guideline value up to an extent of 50 acres and subject to land cost not exceeding 20% of EFA and a cap of Rs. 2 cr. provided that at least 70% of the land is used for manufacturing operations. In case the investor chooses to avail of the land cost subsidy, the land will be excluded from Eligible Fixed Assets for the purpose of the Investment Promotion Subsidy. |
| Employment Incentive | Projects will be provided with an employment incentive in the form of the reimbursement of the employer’s contribution to the EPF for all new jobs created during the policy period. This incentive shall be paid for a period of one year and shall not exceed Rs.48,000 per employee for residents of Tamil Nadu. |
| Green Industry Incentive | Projects under the scope of this Policy shall be eligible to avail of the Green Industry Incentive of up to Rs. 1 crore as per the Tamil Nadu Industrial Policy 2021. |
| Quality Certification Incentive | 50% of the total cost incurred by the project for obtaining certifications from ARAI, ICAT, or any other national or international agencies as certified by a Chartered Accountant, limited to Rs. 1 crore for the period of investment, during the policy period. |
| Intellectual Property Creation Incentive | Projects shall be eligible for 50% reimbursement on the cost incurred for patents, copyrights, and trademarks, subject to a maximum of Rs. 1 crore for the period of the investment, during the policy period. |
| Interest Subvention | An interest subvention of 5% as a rebate on the rate of interest, on actual term loans taken for the purpose of financing the project, for a period of 6 years subject to the investment range. |
- As per the Tamil Nadu EV policy, an additional Capital Subsidy of 20% will be offered over and above the eligibility limit for capital subsidy under the existing capital subsidy scheme to MSME units that are engaged in E-vehicle components or charging infrastructure manufacturers.
- The government will also provide support to companies who wish to transition/diversify into EV manufacturing. Automotive companies shall be eligible for an up-skilling allowance for up to 10% of their existing workforce working on the EV production line.
Conclusion – Tamil Nadu EV Policy:
Globally, the growth of the EV sector has been driven by policy measures and regulatory interventions. The availability of charging stations is a key driver for EV adoption as it helps lower range anxiety as can be seen from other places such as the USA, China, and Europe. As per Fame II (Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India) a total of 281 charging Stations have been sanctioned for Tamil Nadu, which will serve as an important improvement for charging infrastructure development.
To accelerate the development of the EV ecosystem, the Government of Tamil Nadu shall undertake a concerted approach. This shall provide the necessary help in furthering Tamil Nadu’s position as a leading EV hub and also nurture the Make in India scheme of the Indian government. All investment proposals in this sector will be provided with the necessary facilitation through the Single Window Clearance Facility, with the necessary handholding services provided by Guidance/FaMe TN.
About the Author:
 |
Yesyeswini Sarma
An India Market Entry Associate, assisting foreign companies in their Indian market entry with our Pre entry and Setting up services. She acts as a Key account manager in setting up services for greenfield manufacturing companies. |
