Haryana’s EV Policy: State Should Not Copy Others But Chart A Unique Path Based On Its Own Needs

True to its reputation as ready adopter of new technology and always at the forefront of creating a positive environment for businesses, Karnataka became the first state to approve an Electric Vehicle (EV) policy in 2017. Since then at least 10 more states have approved their own policies to spur the adoption and manufacturing of EVs along with support for setting up required infrastructure for charging.

Haryana government has been a laggard in this regard. It finally came up with a draft policy in December 2020 but more than a year has passed and it is yet to be approved and notified. Periodically, the government keeps assuring that the final policy is just around the corner but the consumers and industry are still waiting. Meanwhile, there is an apprehension that early movers may steal the march over Haryana in this fast changing industry. Even those customers who wish to buy the products available in the market are hesitating to go for EVs due to lack of support system of subsidies and infrastructure.

One hopes that the state government will not delay the implementation any further and notify the policy soon.

There are essentially two main objectives outlines in the draft EV policy released in 2020: to make Haryana a global hub for manufacturing of EVs which will also generate employment opportunities in the state and to create an eco-friendly environment by promoting EVs through various interventions (subsidies and incentives).

Like other states, Haryana’s incentives are aimed at incentivising companies to manufacture EVs and components in the state, towards creating a good charging infrastructure and for consumers to buy EVs.

Some of the notable proposals are allocation of 100 to 200 acres of land for developing EV Parks with plug and play internal infrastructure (and also offering land to dependent ancillary units at same rates as original equipment manufacturers); capital subsidy of fixed capital investment ranging from Rs 15 lakhs for micro industries to Rs 20 crore for mega firms; reimbursement of 100 per cent Stamp Duty on purchase/lease of land; subsidised power and water; 100 per cent reimbursement of State Goods and Services Tax up to 5 years for small, up to 7 years for medium and up to 10 years for large industries; road tax exemption only for vehicles purchased within the state; 100 per cent interest free loans for state government employees only to buy EVs; reimbursement of 30 per cent subsidy on road price of EV to consumer; exempting EVs from paying state toll tax and 100 per cent shifting of its fleet by State transport department from ICE vehicles to EVs by 2029 (by 2024 in Gurgaon and Faridabad).

While a few of these proposals are quite unique, the rest of them are being offered by other states as well. Moreover, it’s yet to be seen what the final policy will actually look like. It’s a real possibility that some of the good proposals may get capped.

For instance, 30 per cent subsidy on road price of EVs seems too good to be true. Nexon EV’s on road price (after Centre’s Rs 1.5 lakh FAME 2 subsidy) is Rs 13.5 lakh and by Haryana’s government‘s proposal, consumers will be eligible to get around Rs 4 lakh as reimbursement which will blow the hole in government’s pocket soon. So, either there will be a cap on number of initial customers or total subsidy or be decided on battery pack’s capacity.

Nonetheless, Haryana would go good to chart a more unique path in providing EV incentives and deploy its limited financial resources to receive the best bang for the buck.

First, Haryana is not like Delhi or other states with megacities that have huge car ownership and even commercial cab operators (barring Gurgaon and Faridabad to an extent). Thus the allocation of subsidy for personal and even commercial cars should be less (though not non existent). It needs to focus on deploying incentives mostly towards two wheeler EVs and public transport.

Its decision to convert its state department fleet to all EV is welcome but that’s a pie in the sky and track record of governments is not good in this regard. It takes years to buy new ICE busses. It’s highly unlikely that much costlier EV busses will be shifted to in the next seven years. In Haryana, a huge section of public is served by private bus operators. This is the area the government should focus on. Every year, these operators get license In exchange for hefty price and get to ply on certain routes.

This fleet is big and government should delicense the routes if the operators shift to EVs. It will not only be good from EV point of view but will be a huge step in freeing the transport sector from government control and increase service for travellers. Punjab is offering a 100 per cent permit fee exemption for all commercial EVs including e-buses. Haryana should emulate it.

Second, rather than giving subsidy of Rs 15 lakhs to Rs 20 crore for industries on their fixed capital investment, the state government should look at the Centre’s successful production linked incentive scheme and offer attractive cash incentive on the total manufacturing volumes churned out by factories in Haryana. Temporary SGST exemption and reimbursement is a good step and in the long term, the state will accrue lot of benefits in form of taxes, ecosystem of supporting firms and resulting employment due to all the new units. This is the time to find the next Maruti for EV age Haryana and actively pursue new startups like Ola and Ather to setup bases here.

Finally the interest free loan on EVs should be made available for buying of EV by any customer and not just limited to government employees alone. The government should focus on these instruments rather than one time Big Bang cash subsidies like 30 per cent reimbursement on road price of the vehicle. It’s better to span the subsidies over years than front loading them. The latter can be a big financial burden. So, the focus should be more on the former.

Some of the proposals in Haryana’s draft EV policy have been directly lifted from other states‘ policies. While there is nothing wrong is emulating good initiatives of others, it would be prudent to tailor the incentives as per unique needs and situations of the state and target the limited resources accordingly.