The Government will Shorten Time it Takes to Process EV Subsidy Claims

According to reports, the Ministry of Heavy Industries (MHI) intends to cut the 40-day processing period for EV subsidy claims to just five days. The Centre aims to resolve technical bottlenecks and expedite verification procedures in order to carry out such a move.

Under the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) programme, the government is taking this action in an effort to reduce the backlog and guarantee the prompt distribution of EV subsidies.

There is already a massive backlog of 126,000 pending subsidy claims for 2024–2025. There are 109,000 claims for e-2Ws alone out of 893,000 claims altogether. Face authentication concerns have been blamed for these delays since buyers' appearances may differ from their Aadhaar images, which makes identity verification difficult. One of the MHI's main initiatives to hasten EV adoption and build out supporting infrastructure nationwide is the PM E-DRIVE Scheme.

The programme will replace previous programmes like FAME and EMPS-2024 and has a budgetary investment of INR 10,900 CR. It will run from October 2024 to March 2026.

Government Pushing the Usage of EVs in India

The action is in line with the government's objective of having 30% of all automobile sales be electric by 2030. Additionally, this includes sector-specific goals, such as 80% of two- and three-wheelers, 40% of buses, and 70% of commercial vehicles being electric by 2030.

The Ministry of Heavy Industries (MHI) earlier told the Lok Sabha that, as of December 2023, the government has given EV producers a total of INR 52.28 billion in subsidies, depending on the sale of around 1.15 million EVs.

 The development coincides with the nation's EV industry's growth, which is predicted to reach 20 million sales by 2030 and generate a $132 billion EV market by that time. The government has traditionally taken a protectionist stance towards the auto industry, enforcing high tariffs to encourage the development of a domestic EV ecosystem while keeping international players at bay.

 Furthermore, international businesses usually formed joint ventures with local firms to reach the Indian market. In the meantime, programmes such as PM e-Bus Sewa, FAME, and the PLI projects, among others, have contributed to the development of the necessary environment for local players to prosper.

India has thus become the third-largest vehicle market in the world, giving rise to four soonicorns and two unicorns in the EV startup space.

India’s EV Sector Spreading its Wings

Since 2014, more than 119 EV businesses have raised over $3.7 billion in investment. With Ather starting its IPO subscription process on 28 April and Ola Electric listing last year, these businesses have also started to establish themselves on Indian exchanges.

However, in response to increased international interest in gaining a piece of the Indian EV industry, the government is now considering opening the market to overseas competitors under certain restrictions.

Prior to this, India was considering reducing import taxes on luxury EVs (those costing more than $35,000) from 110% to 15%, but only if automakers met specific requirements, such as investing at least INR 4,150 Cr ($500 Mn) in India and establishing a local production plant within three years.

 Recently, Elon Musk's Tesla and Indonesian EV powerhouse VinFast have been attempting to enter the market.