State-Supportive Policies Accelerate EV Adoption Finds RBI Study

Mumbai: With nearly three-fourths of vehicle registrations in India comprising two-wheelers (2W) in 2024-25, the central bank in its August Bulletin said that any initiative aimed at promoting electric vehicles (EVs) must focus on the adoption of two-wheeler electric vehicles (2W-EVs) to meet the country's decarbonisation goals.

A study conducted by the RBI to look into the impact of state-level EV promotion policies on the adoption of 2W-EVs found that states that provided supportive policies such as financial incentives, tax exemptions, and investments in charging were witnessing stronger adoption of 2W-EVs.

Most state governments have been offering incentives such as subsidies along with tax and registration fee waivers on every new 2W-EV purchase. On the other hand, a few states did not offer any additional subsidies beyond tax and registration fee waivers. An analysis of the 2W-EV adoption ratio in 23 states for the September 2023 quarter found that the six states that offered only tax and registration fee waivers without any additional subsidies recorded a sharp 24 per cent fall in adoption ratio on a quarter-on-quarter basis. On the other hand, 17 states that provided top-up subsidies in addition to tax and registration waivers witnessed a smaller decline of 17 per cent. Regional disparity exists in adoption rates, with southern and western states exhibiting higher adoption rates, partly due to better charging infrastructure and the early development of EV policies. while northern and eastern regions lag. The study also found that a major bottleneck in adoption of an EV over an internal combustion engine powered vehicle is lack of adequate charging infrastructure. States like Andhra Pradesh, Assam, Bihar, Chhattisgarh, Gujarat, Kerala, etc. have been providing capital subsidies ranging between 25-60 per cent on total cost of charging station equipment/machinery and components. Delhi has provision to sanction 100 per cent grant on purchase of charging equipment, said the report. The study concluded that strong charging infrastructure, even with moderate policy support, can enhance the adoption of 2W-EVs.