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Subsidy on electric vehicles: State-wise EV incentives and benefits for car, bike, scooter and commercial vehicles in India

Team Ackodrive6, Oct, 2021

Electric vehicles or EVs are touted to be the future of mobility. However, ‘cost’ is one of the biggest hurdles for eco-friendly vehicles, especially in a price-sensitive market such as India. In such a scenario, government-provided subsidy on electric vehicles becomes crucial to smoothen the road for EVs in India. In this article, we provide you with the state-wise EV subsidies list. So, if you are planning to buy an electric car/bike, you can refer to this list.

Subsidy on Electric Vehicles

State-wise electric car subsidies

Apart from the national FAME II scheme, each state has its policy for e-mobility and criteria for electric car subsidy. So, the state government-provided incentives may vary from one state to another. The below table lists the state-wise government subsidies for electric cars and SUVs.

State Subsidy (Per kWh) Maximum subsidy Discount on road tax
Maharashtra Rs. 5,000 Rs. 2,50,000 1
Delhi Rs. 10,000 Rs. 1,50,000 1
Gujarat Rs. 10,000 Rs. 1,50,000 0.5
Meghalaya Rs. 4,000 Rs. 60,000 1
Assam Rs. 10,000 Rs. 1,50,000 1
Bihar Rs. 10,000 Rs. 1,50,000 1
West Bengal Rs. 10,000 Rs. 1,50,000 1
Odisha NA Rs. 1,00,000 1
Rajasthan Nil Nil NA
Uttar Pradesh Nil Nil 0.75
Kerala Nil Nil 0.5
Karnataka Nil Nil 1
Tamil Nadu Nil Nil 1
Telangana Nil Nil 1
Madhya Pradesh Nil Nil 0.99
Andhra Pradesh Nil Nil 1
Punjab Nil Nil 1

Maharashtra: The maximum subsidy includes the early bird incentive.

Delhi: The subsidy applies only to the first 100 EV buyers.

Bihar and Punjab: The policy is yet to be approved.

Subsidy on electric scooter and bikes: State-wise data

Similar to electric car/SUV subsidies, electric two-wheelers are also eligible for state government-provided subsidies. Refer to the table below for electric scooter subsidy and electric bike subsidy in each state.

State Subsidy (Per kWh) Maximum subsidy Discount on road tax
Delhi Rs. 5,000 Rs. 30,000 1
Maharashtra Rs. 5,000 Rs. 25,000 1
Meghalaya Rs. 10,000 Rs. 20,000 1
Gujarat Rs. 10,000 Rs. 20,000 0.5
Assam Rs. 10,000 Rs. 20,000 1
Bihar Rs. 10,000 Rs. 20,000 1
West Bengal Rs. 10,000 Rs. 20,000 1
Rajasthan Rs. 2,500 Rs. 10,000 NA
Odisha NA Rs. 5,000 1
Uttar Pradesh Nil Nil 1
Kerala Nil Nil 0.5
Karnataka Nil Nil 1
Tamil Nadu Nil Nil 1
Telangana Nil Nil 1
Madhya Pradesh Nil Nil 0.99
Andhra Pradesh Nil Nil 1
Punjab Nil Nil 1

Maharashtra: The maximum subsidy includes the early bird incentive.

Bihar and Punjab: The policy is yet to be approved.

Note: The subsidy figures for electric cars and two-wheelers are taken from each state government’s website.

What is a FAME subsidy?

FAME or Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India is an incentive scheme for electric vehicles launched by the Government of India. The incentive scheme for EVs was launched under National Mission on Electric Mobility 2011/National Electric Mobility Mission Plan 2020 and was unveiled in 2013. Below are the key features of this subsidy scheme.

  • The first phase of the FAME I scheme was initially approved for two years, starting from April 1, 2015. 

  • From then, the EV subsidy scheme was extended from time to time. The last extension of the first phase of FAME was up to March 31, 2019.

  • The FAME scheme works on Demand Incentive Disbursement Mechanism. The EV subsidy amount for each vehicle category (pure electric, hybrid, etc.) is already determined based on the technology and battery specifications.

What is FAME II (FAME 2)  subsidy?

FAME II is nothing but the second phase of the EV subsidy scheme. It was launched on April 1, 2019. The government introduced the incentive program with an outlay of Rs. 10,000 crores for three years, beginning from April 2019. Below are the key highlights of FAME II.

  • The FAME II aims at supporting 7,000 e-buses, 5 lakh electric 3-wheelers, 55,000 electric cars and 10 lakh electric 2-wheelers. 

  • In the latest development, the EV subsidy scheme has been further extended till March 2024. 

  • One of the main highlights of the revised FAME II scheme is increased subsidy for electric two-wheelers. 

  • Initially, the incentive in two-wheeler EVs stood at Rs. 10,000 per kWh. Now, it has been increased by 50% and stands at Rs. 15,000 per kWh.

  • Also, the cap on subsidy has been increased from 20% to 40% of the vehicle’s cost.

  • For four-wheeler EVs, the subsidy remains to be the same, Rs. 10,000 per kWh.

  • The maximum incentive amount for an electric car stands at Rs. 1.5 lakhs.

Requirements for FAME II

Electric cars and electric two-wheelers are eligible for the FAME 2 subsidy. However, you should be aware of the nitty-gritty of the subsidy program while purchasing an EV.

  • Electric cars and SUVs (Sports Utility Vehicles) are eligible for the subsidy. However, the ex-factory cost is capped at Rs. 15 lakhs. That means EV four-wheelers costing over Rs. 15 lakhs are not eligible for the subsidy.

  • For battery-powered two-wheelers, the eligibility criteria for this scheme is a minimum range of 80 km and a minimum top-speed of 40 km/h.

  • Electric two-wheelers under Rs. 1.5 lakhs are eligible for the FAME II subsidy scheme.

How does the FAME subsidy work?

FAME is a scheme designed to encourage the purchase of battery-powered vehicles by offering upfront incentives. But how does it work while buying an EV? The below points explain how the FAME subsidy works.

  • First of all, you have to purchase an electric vehicle that is eligible for the FAME subsidy.

  • To offer the incentive, the OEM (Original Equipment Manufacturer) should register for the FAME scheme. A non-register OEM cannot provide you with the subsidy.

  • When purchasing an eco-friendly vehicle, the dealer will quote the price post deduction of the subsidy amount. For example, if the price of an EV is Rs. 1 lakh and the subsidy is Rs. 30,000. The dealer may quote a cost of Rs. 70,000.

  • Once the purchase is complete, the dealer will forward the purchase details to the OEM.

  • The OEM will forward the purchase details to the National Automotive Board (NAB) that monitors the subsidy scheme.

  • Post verification, the incentive is credited to the OEM. The OEM will credit the subsidy amount to the dealer.

Government subsidy on commercial electric vehicles

Apart from electric car subsidies in India, the FAME scheme was also framed to encourage manufacturing and sales of commercial electric vehicles such as e-rickshaws and e-buses. The induction of e-mobility to the public transport system will reduce vehicular emissions—a rapidly growing challenge in major cities.

Below are the government subsidies that are available for commercial vehicles.

  • The government offers an incentive of Rs. 20,000 per kWh to state transport units (STU) to encourage the purchase of electric buses. However, the subsidy may be subject to bidding by OEMs.

  • Electric buses under Rs. 2 crores and strong/plug-in hybrid commercial vehicles under Rs. 15 lakhs are eligible for subsidy.

  • Electric three-wheelers or e-rickshaws under Rs. 5 lakhs are also eligible for incentives.

  • The exact amount of subsidy on commercial vehicles depends on the cost, technology and battery capacity.

Top EV-friendly states with the best incentives for electric vehicle buyers

In India, each state has its EV policy framed in conjunction with the FAME subsidy scheme. So, the state government incentives on battery-powered vehicles differ from one state to another. Hence, an EV may be priced lower in one state than another. Below is the list of top EV-friendly states that offer the best subsidies for electric vehicles.

1. Delhi

Delhi electric vehicle subsidy
Two-wheeler Rs. 5,000 per kWh (Maximum upto Rs. 30,000)
No road tax and registration charges
Three-wheeler Benefits upto Rs. 30,000.
No road tax and registration charges
Four-wheeler Rs. 10,000 per kWh (Maximum upto Rs. 1.5 lakhs)
No road tax and registration charges

>Back to Top

Delhi matches the subsidy offered by the Government of India. Besides the EV subsidy, Delhi has also waived the road tax and registration fees for all electric vehicles. It makes Delhi one of the best cities to own an eco-friendly vehicle. However, the benefits mentioned above apply only to the first 1,000 buyers.

2. Gujarat

Gujarat electric vehicle subsidy
Two-wheeler Rs. 10,000 per kWh (Maximum upto Rs. 20,000)
50% discount on road tax.
No registration charges.
Three-wheeler Benefits upto Rs. 50,000
No registration charges
Four-wheeler Rs. 10,000 per kWh (Maximum upto Rs. 1.5 lakhs)
50% discount on road tax.
No registration charges.

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3. Maharashtra

Gujarat electric vehicle subsidy
Two-wheeler Rs. 5,000 per kWh (Maximum upto Rs. 25,000)
No registration charges and road tax.
Three-wheeler Benefits upto Rs. 30,000
No registration charges and road tax.
Four-wheeler Rs. 5,000 per kWh (Maximum upto Rs. 2.5 lakhs including the early bird incentive)
No registration charges and road tax.

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Apart from the regular incentives, Maharashtra also offers an early bird incentive worth Rs. 1 lakh. That takes the maximum subsidy to Rs. 2.5 lakhs for electric four-wheelers. One can avail of the early bird incentive till the end of 2021.

4. Meghalaya

Meghalaya electric vehicle subsidy
Two-wheeler Rs. 10,000 per kWh (Maximum upto Rs. 20,000)
No registration charges and road tax.
Three-wheeler NA
Four-wheeler Rs. 4,000 per kWh (Maximum upto Rs. 60,000)
No registration charges and road tax.

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Meghalaya’s electric vehicle policy is aimed at early buyers and covers less number of vehicles. The benefits mentioned above can be availed by 2,400 EV car buyers and 3,500 battery-powered two-wheelers. However, Meghalaya has also waived road tax and registration charges for all EVs.

5. Karnataka

Subsidy for electric vehicles in Karnataka

Besides the central government’s FAME subsidy, Karnataka does not offer any direct incentives to electric vehicle buyers. But that doesn’t make Karnataka less significant than other states in this list. That’s because Karnataka’s EV policy offers subsidies and concessions to EV makers (components, battery, charging enterprise).

Recently Tesla announced that it would set up a manufacturing plant in Karnataka. It reflects the contribution of Karnataka to India’s push for electric mobility. Apart from that, Karnataka has also waived road tax and registration charges for battery-powered vehicles.

6. Andhra Pradesh

Subsidy for electric vehicles in Andhra Pradesh

Similar to Karnataka, Andhra Pradesh also does not offer any direct subsidies for EV owners. However, the state provides an exemption from road tax and registration charges for all eco-friendly vehicles registered in the state.

7. Telangana

Electric vehicle subsidy in Telangana

Telangana also offers 100% exemption from registration fees and road tax for battery-powered vehicles. However, the state does not provide any direct subsidies except for the nationwide FAME incentive.

8. Tamil Nadu

Electric vehicle subsidy in Tamilnadu

Currently, Tamil Nadu grants a 100% road tax waiver, and there are no registration charges for EVs. However, there is no state-provided incentive scheme for buyers. But that may change soon as the state government is planning to revise the EV policy.

9. Kerala

Electric vehicle subsidy in Kerala

Kerala offers a 50% discount on road tax for electric vehicles for the first five years. The state also offers a subsidy of Rs. 25,000 to Rs. 30,000 to 10,000 e-rickshaws. However, there are no direct incentives for EV buyers.

How subsidy scheme boost EV sales in India

One of the main reasons behind the sluggish sales of EVs in India is the cost. The upfront cost to own an electric vehicle is way higher than conventional vehicles. The second primary reason for the hesitancy of EV adoption is the lack of charging infrastructure. It has triggered range anxiety among the buyers. Both these issues need to be addressed to smoothen the road for EVs in India.

The central government framed the FAME subsidy scheme to address the issues mentioned above. The below points will explain how the incentive program may boost sales of battery-powered vehicles in India.

  • The FAME incentives enable EV manufacturers to reduce the price of vehicles. The lower price tag will attract more buyers.

  • The additional state incentives make electric vehicles even more affordable and bridge the price gap between eco-friendly and conventional vehicles.

  • With attractive central and state government subsidies, the buyers can consider EVs as a feasible alternative to conventional vehicles.

  • Apart from private vehicles, the FAME scheme also supports commercial vehicles. Hence, expect state governments to procure more battery-powered vehicles for public transport.

Frequently asked questions

Here are some of the most frequently asked questions related to subsidies on electric vehicles in India.

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Will I get any subsidy if I buy an electric car in India?

Yes, you are eligible for the FAME II subsidy on purchasing an electric car in India, provided the vehicle meets the requirements proposed by the government.

What is the amount of subsidy I get on the purchase of an eco-friendly car?

Under the FAME scheme, the subsidy amount for electric cars stands at Rs. 10,000 per kWh. So, the amount of subsidy depends on the battery capacity. However, the maximum incentive is capped at Rs. 1.5 lakhs. Apart from the FAME subsidy, you may also avail state EV subsidy if your state offers direct incentives on EVs.

I'm planning to buy a Tata Nexon EV. Will I get any subsidy?

Yes, you are eligible for the FAME subsidy if you opt for the base variant of the Tata Nexon EV because the ex-factory cost is capped at Rs. 15 lakhs. So, if the vehicle costs above Rs. 15 lakhs, you cannot avail subsidy on Tata Nexon EV. Currently, the base XM variant of the Nexon EV costs Rs. 13.99 lakhs ex-showroom.

Will I get the FAME subsidy credited to my bank account while purchasing an EV?

No, the FAME subsidy will not get credited to your bank account. Instead, the dealer will provide an upfront discount on the vehicle's price, equalling the amount of incentive. Later, the government will credit the subsidy amount to the dealer.

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